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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted)
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CENTURA BANKS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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March 11, 1998
Dear Shareholder:
The 1998 Annual Meeting of Shareholders of Centura Banks, Inc. will be
held at 10:00 a.m. on Wednesday, April 15, 1998, in the Dunn Center, North
Carolina Wesleyan College, 3400 N. Wesleyan Blvd., Rocky Mount, North Carolina.
The meeting agenda is described in the attached Notice of Annual Meeting and
Proxy Statement.
If you are a shareholder of record, we urge you to send in your proxy
promptly for the Annual Meeting, whether or not you plan to attend. Giving your
proxy will not affect your right to vote in person if you attend. See the
attached Proxy Statement for further information regarding your rights to vote
your proxy.
Centura's audited financial statements and other required disclosures are
presented in the 1997 Annual Report on Form 10-K, a copy of which accompanies
the Proxy Statement. Centura's 1997 Annual Report to shareholders has been
mailed to you under separate cover.
While I hope you will review all of this year's Proxy Statement carefully,
I would particularly address your attention to its discussion of corporate
governance. During 1997, the Centura Board, acting through its Corporate
Governance Committee, engaged in the difficult work of assessing, among other
things, its own composition in light of the corporation's needs both today and
for the future. As a result, the Board determined to move over time both to a
smaller size and a more diverse composition. Implementation of this decision
required leadership and, as they have done so many times in the past, Bob
Mauldin and Dick Futrell provided it. Bob and Dick have graciously volunteered
to resign prior to the completion of their current terms as Centura directors,
thus enabling us to begin promptly the changes that will result in a Board that
can provide continuing leadership in the rapidly changing environment that we
face. Directors Bill Hoover and Joe Wallace have also volunteered to leave the
Board on April 15, further assisting the process of change and renewal. On
behalf of the Board, management and the employees of Centura, I would like to
publicly thank all of these gentlemen for their extraordinary contributions in
the past and to wish them the very best in the future.
We would like to welcome as shareholders those persons who purchased
Centura's stock during 1997.
Sincerely,
[GRAPHIC OMITTED]
/s/ Cecil W. Sewell, Jr.
Cecil W. Sewell, Jr.
Chairman of the Board and
Chief Executive Officer
YOUR PROXY IS IMPORTANT...PLEASE VOTE PROMPTLY
[GRAPHIC OMITTED]
134 North Church Street
Rocky Mount, North Carolina 27804
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 15, 1998
----------------------------------------
Notice is hereby given that the annual meeting of the shareholders of
Centura Banks, Inc. will be held in the Dunn Center, North Carolina Wesleyan
College, 3400 N. Wesleyan Blvd., Rocky Mount, North Carolina on Wednesday,
April 15, 1998, at 10:00 a.m. for the following purposes:
1. To elect eight Class II directors for terms of three years and two
Class III directors for terms of one year;
2. To act on a proposal to amend the Centura Banks, Inc. Omnibus Equity
Compensation Plan (the "Omnibus Plan") to increase the aggregate number of
shares of common stock of Centura Banks, Inc. available for awards under
the Omnibus Plan; and
3. To act upon such other matters as may properly come before said
meeting and any adjournment thereof.
Only shareholders of record at the close of business on February 27, 1998,
will be entitled to notice of and to vote at the annual meeting.
/s/ Cecil W. Sewell, Jr.
Cecil W. Sewell, Jr.
Chairman of the Board and
Chief Executive Officer
March 11, 1998
YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. YOU ARE REQUESTED TO
FILL IN, DATE, SIGN, AND RETURN THE PROXY SUBMITTED HEREWITH IN THE ENCLOSED
ENVELOPE. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE SUCH
PROXY OR TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE MEETING.
CENTURA BANKS, INC.
134 NORTH CHURCH STREET
ROCKY MOUNT, NORTH CAROLINA 27804
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
APRIL 15, 1998
This proxy statement is furnished to all shareholders in connection with
the solicitation by the Board of Directors of Centura Banks, Inc. ("Centura")
of proxies to be used at the annual meeting of shareholders to be held in the
Dunn Center, North Carolina Wesleyan College, 3400 N. Wesleyan Blvd., Rocky
Mount, North Carolina, at 10:00 a.m. on April 15, 1998, and at all adjournments
thereof (the "Annual Meeting").
The matters to be considered and voted upon at the Annual Meeting will be:
(1) election of eight Class II directors for terms of three years and two Class
III directors for terms of one year; (2) voting on a proposal to amend the
Centura Banks, Inc. Omnibus Equity Compensation Plan (the "Omnibus Plan") to
increase the aggregate number of shares of common stock of Centura available
for awards under the Plan and (3) action upon such other matters as may
properly come before the Annual Meeting and any adjournment thereof.
This proxy statement and the accompanying proxy are being mailed on or
about March 11, 1998.
PROXIES
A proxy for use at the Annual Meeting is enclosed. Any shareholder who
executes and delivers such proxy has the right to revoke it at any time before
it is exercised by filing with Cecil W. Sewell, Jr., Chairman of the Board and
Chief Executive Officer of Centura, an instrument revoking it, or by executing
a proxy bearing a later date, or by attending the Annual Meeting and voting in
person. All shares represented by valid proxies received pursuant to this
solicitation that are not revoked before they are exercised will be voted in
the manner specified therein. If no specification is made, the proxies will be
voted in favor of the nominees for election to the Board of Directors and the
proposed amendment to the Omnibus Plan. The Board of Directors is not aware of
any other matters that may be presented for consideration at the Annual
Meeting, but, if other matters do properly come before the meeting, it is
intended that all shares represented by proxies in the accompanying form will
be voted by the persons named in the proxy in accordance with their best
judgment.
Solicitation of proxies may be made in person or by mail, or by telephone
or facsimile transmission, by directors, officers, and regular employees of
Centura, none of whom will be specially compensated therefor. Brokerage houses,
nominees, fiduciaries, and other custodians will be requested to forward
solicitation materials to beneficial owners and secure voting instructions, if
necessary, and will be reimbursed for the reasonable out-of-pocket expenses
incurred in sending such solicitation materials to beneficial owners. Centura
has retained W. F. Doring & Company to aid in the solicitation of proxies and
to verify certain records relating to the solicitation at a fee not to exceed
$3,000 plus expenses.
The persons named on the proxy to represent shareholders at the Annual
Meeting are Ernest L. Evans of Ahoskie, North Carolina, and Robert L. Hubbard
of Henderson, North Carolina.
The costs of preparing, assembling, and mailing this proxy statement and
proxies and the costs associated with the solicitation of such proxies will be
borne by Centura. Shareholders are urged to return their proxies without delay.
VOTING RIGHTS
The Board of Directors of Centura has fixed the close of business on
February 27, 1998, as the record date (the "Record Date") for the determination
of shareholders of Centura entitled to receive notice of and to vote at the
Annual Meeting. As of the Record Date, there were 25,980,541 shares of the
common stock of Centura, no par value per share ("Centura Common Stock"),
issued and outstanding and held by holders of record. Each share of Centura
Common Stock issued and outstanding as of the Record Date is entitled to one
vote on each matter to be voted on at the Annual Meeting.
I-1
Of the 25,980,541 shares of Centura Common Stock outstanding on the Record
Date, 1,321,548 shares (representing 5.1%) were held by the Trust Department of
Centura's wholly-owned subsidiary, Centura Bank ("Centura Bank"), in a
fiduciary capacity, which shares are included in the total outstanding shares
eligible to vote or to be counted in determining the total number of shares
entitled to vote on each matter to be voted on at the Annual Meeting.
Some of Centura's shareholders are participants in the Centura Banks, Inc.
Dividend Reinvestment Stock Purchase Plan (the "Dividend Reinvestment Plan")
and, as such, are beneficial owners of shares that are held of record by
Registrar and Transfer Company, Cranford, New Jersey ("R&T"), as agent under
the Dividend Reinvestment Plan. Such shares are eligible to vote and be counted
at the Annual Meeting and, under the terms and conditions of the Dividend
Reinvestment Plan, R&T will vote such shares in accordance with the directions
of shareholders. Shareholders participating in the Dividend Reinvestment Plan
will be mailed a copy of the notice of the Annual Meeting, a copy of this proxy
statement, and a proxy that will be used to direct the voting of shares of
Centura Common Stock held of record by R&T under such plan. Should the
shareholder fail to execute and deliver the proxy to R&T prior to the Annual
Meeting, R&T will not vote said shares. Rights of shareholders to direct voting
under the Dividend Reinvestment Plan arise and are created solely under said
plan.
Also included among the total number of shares entitled to vote and be
counted at the Annual Meeting are shares held by Centura Bank as trustee (the
"Trustee") under the Centura Banks, Inc. 401(k) Plan (the "401(k) Plan"). Each
participant under the 401(k) Plan is entitled to direct the Trustee as to the
manner in which the shares of Centura Common Stock allocated to such
participant's Centura Common Stock fund under the 401(k) Plan are to be voted.
Each such participant is being mailed a copy of the notice of the Annual
Meeting, a copy of this proxy statement, and a proxy that will be used to
direct the voting of shares of Centura Common Stock allocated to a
participant's Centura Common Stock fund under the 401(k) Plan. Upon receipt of
the proxies and tabulation of the vote of the participants under the 401(k)
Plan, the Trustee will vote the Centura Common Stock held under the 401(k) Plan
as instructed. Any shares of Centura Common Stock held under the 401(k) Plan
that are eligible to vote but as to which the Trustee receives no voting
instructions will be voted by the Trustee in its discretion. Rights of
shareholders to direct voting under the 401(k) Plan arise and are created
pursuant to the Internal Revenue Code of 1986, as amended (the "Code"), and the
terms of the plan.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Restated Articles of Incorporation of Centura require that the Board
of Directors be comprised of not less than 15 nor more than 30 members, as
specified in the Bylaws of Centura, divided into three classes that are equal
or nearly equal in number to each other. Centura's organizational documents
authorize the Board of Directors to amend the Bylaws from time to time to
specify the number of members of the Board within the range just mentioned. The
term of one class expires each year, with the terms of Class II directors
expiring at the Annual Meeting.
During 1997, the Board of Directors determined that it was necessary to
consider in a formal way a number of issues relating to the governance of
Centura, including particularly the structure, composition and governance of
the Board itself. To that end, the Board appointed a Corporate Governance
Committee, whose members included Robert R. Mauldin, who served as chairman,
Thomas A. Betts, Jr., Robert L. Hubbard, Frank L. Pattillo and Charles P.
Wilkins. The Corporate Governance Committee's work in 1997 included a review of
relevant literature on the topic and a survey of Centura's directors. At the
conclusion of this work, the committee presented findings to the Board that
recommended, among other things, a reduction in the size of the Board and of
the number of present and former Centura officers who are members of the Board.
In order to allow the prompt implementation of this recommendation of the
Corporate Governance Committee, Messrs. Mauldin and J. Richard Futrell, Jr.,
each of whom is a former chairman of the Board, voluntarily resigned from the
Board in December 1997, effective April 15, 1998, the date of the Annual
Meeting. In February 1998, William D. Hoover, an Executive Vice President of
Centura Bank, and Joseph L. Wallace, Jr., retired President of Mid-South Bank
and Trust Company (now merged into Centura Bank), also voluntarily resigned
from the Board effective April 15, 1998, to assist in the implementation of the
Corporate Governance Committee's recommendations on Board structure.
The Corporate Governance Committee also recommended that the Board's
membership be broadened over time in terms of diversity of personal and
professional experience. To that end, the Board, acting through the Nominating
Committee, instituted a search for new board members. As a result of this
activity, the Nominating Committee recommended to the Board the nomination of
Bernard W. Franklin, President of Saint Augustine's College, Raleigh, North
Carolina, and Susan E. Gravely, President of Vietri, Inc., a wholesale
distributor of Italian dinnerware and decorative accessories located in
Hillsborough, North Carolina, to serve as Centura directors.
I-2
At its meeting on February 18, 1998, the Board of Directors amended the
Bylaws to provide that the number of directors of Centura would be
twenty-three, comprised of eight Class I directors, eight Class II directors
and seven Class III directors. The Board of Directors then nominated the eight
persons named below for election as Class II directors and nominated Dr.
Franklin and Ms. Gravely to serve as Class III directors. If elected, each of
the persons nominated to serve as a Class II director shall serve a term of
three years or until his successor is elected and qualified and each of the
persons nominated to serve as a Class III director shall serve a term of one
year or until his or her successor is elected and qualified. The Bylaws of
Centura provide that a vacancy in the Board of Directors may be filled only by
the Board of Directors. Shareholders may not vote for a greater number of
persons than the number of nominees named herein.
The persons nominated below will be elected if they receive a plurality of
the votes cast for their election. Unless authority is withheld on the proxy,
all proxies received in response to this solicitation will be voted for the
election of the persons nominated below, except that if any of said persons
shall become unavailable for election, such proxies will be voted for the
election of such persons as management shall designate in substitution for the
nominees so unavailable. Management has no reason to believe that any of its
nominees will be unavailable for election.
The Board of Directors recommends the election of the persons named below
as directors at the Annual Meeting. With respect to the election of directors,
votes may be cast in favor of or withheld from each nominee; votes that are
withheld will be excluded entirely from the vote and will have no effect. Under
the rules of the New York Stock Exchange (the "NYSE"), brokers who hold shares
in street name have the authority to vote on certain items when they have not
received instructions from beneficial owners. Brokers that do not receive
instructions are entitled to vote on the election of directors. Under
applicable North Carolina law, a broker non-vote will have no effect on the
outcome of the election of directors.
I-3
NOMINEES
Term To
Expire At
Principal Occupation And Business Director Meeting For
Name Age (1) Experience For The Past Five Years Since The Year Class
- -------------------------- --------- ----------------------------------------- ---------- ------------ ------
C. Wood Beasley 68 President, Wood Beasley Farms, Inc. 1990 2001 II
Thomas A. Betts, Jr. (2) 56 Since November 3, 1997, Senior 1990 2001 II
Insurance Officer, Centura Insurance
Services, Inc.; prior to that date,
partner, Betts & Company (insurance
broker and agent)
Bernard W. Franklin (3) 45 President, Saint Augustine's College N/A 1999 III
since March 31, 1995; prior to that,
President, Livingstone College,
Salisbury, NC.
Susan E. Gravely 47 President, Vietri, Inc. (wholesale N/A 1999 III
distributor of Italian dinnerware and
decorative accessories)
Joseph H. Nelson(4) 66 Chairman and President, Davenport 1996 2001 II
Motor Company (automobile sales)
Dean E. Painter, Jr.(5) 54 Chairman, CLG, Inc. (technology 1996 2001 II
leasing) (6)
Frank L. Pattillo 55 Group Executive Officer, Centura, since 1990 2001 II
February 1997; Group Executive
Officer and Chief Financial Officer,
Centura, from April 1996 to February
1997; prior to that, Senior Executive
Vice President and Chief Financial
Officer, Centura
George T. Stronach III 57 Real Estate Developer 1996 2001 II
Alexander P. Thorpe III 60 President, Thorpe & Company, Inc. 1990 2001 II
(investment company)
William H. Wilkerson 51 Group Executive Officer, Centura, since 1990 2001 II
April 1996; prior to that, Senior
Executive Vice President, Centura
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(1) As of April 15, 1998.
(2) Betts & Company was acquired by Centura on November 3, 1997. Prior to such
acquisition, Betts & Company was not affiliated with Centura or any of its
subsidiaries; however, Mr. Betts was a director of Centura prior to such
acquisition.
(3) Dr. Franklin also serves as a director of Food Lion, Inc.
(4) Mr. Nelson also serves as a director of Commonwealth Dealers Life Insurance
Co.
(5) Mr. Painter also serves as a director of CCAir, Inc.
(6) CLG, Inc. was acquired by Centura in November 1996, and is maintained as a
subsidiary of Centura Bank. Prior to such acquisition, CLG, Inc. was not
affiliated with Centura or any of its subsidiaries.
I-4
DIRECTORS CONTINUING IN OFFICE
Term To
Expire At
Principal Occupation And Business Director Meeting For
Name Age (1) Experience For The Past Five Years Since The Year Class
- ------------------------------- --------- -------------------------------------------------- ---------- ------------ ------
Richard H. Barnhardt 63 President, Properties, Inc. (real estate 1990 2000 I
development)
H. Tate Bowers 60 Chief Executive Officer, Bowers Fibers, Inc. 1996 1999 III
(textile manufacturer)
Ernest L. Evans 53 President, ELE, Inc., (agri-business management 1996 2000 I
company)
John H. High 61 President, John H. High & Co., Inc. (real estate 1990 1999 III
development)
Michael K. Hooker (2) 52 Chancellor, University of North Carolina at 1996 2000 I
Chapel Hill since July 1995; prior to that,
President, University of Massachusetts
Robert L. Hubbard 63 President and CEO, RLH Associates since 1990 1999 III
January 1, 1997 (management consultants);
prior to that, Vice Chairman, Americal
Corporation (hosiery manufacturer)
William H. Kincheloe(3) 60 President, Bulluck Furniture Company, Inc. and 1990 2000 I
Wildwood Lamps and Accents, Inc.
Charles T. Lane(4) 66 Partner, Poyner & Spruill, L.L.P. (Attorneys at 1990 2000 I
law)
O. Tracy Parks, III 54 Partner, Parks, Pate & Scarborough, L.L.P. 1990 2000 I
(Attorneys at law)
William H. Redding, Jr. 61 President, Acme-McCrary Corporation (textile 1995 1999 III
manufacturer)
Charles M. (Terry) Reeves III 54 President, Reeves Properties, Inc. (real estate 1990 1999 III
development)
Cecil W. Sewell, Jr. 51 Chairman of the Board, Chief Executive Officer, 1990 2000 I
and President, Centura, since February, 1997;
President and Chief Operating Officer,
Centura, from 1993 through January, 1997;
prior to that Senior Executive Vice President,
Centura
Charles P. Wilkins 53 Partner, Broughton, Wilkins, Webb, & Sugg, 1996 2000 I
P.A. (Attorneys at law)
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(1) As of April 15, 1998.
(2) Dr. Hooker also serves as a director of 360 Degree Communications.
(3) Mr. Kincheloe also serves as a director of North Carolina Railroad Company.
(4) In November 1993, Mr. Lane pled guilty without a trial to a violation of a
Federal law regarding private cellular telephone communications relating
to a state political campaign. He was charged with reviewing "written
descriptions of the contents of the radio portion of cellular telephone
communications having reason to know that the information was obtained
through the interception of electronic communications." Because the
alleged violation, among other elements, was a first offense and was not
for tortuous or illegal purposes or for purpose of direct or indirect
commercial advantage or private commercial gain, the offense charged was
an infraction. Under Federal law, an infraction is the least serious of
offenses and is considered less serious than a misdemeanor. Upon full
disclosure of the foregoing, the Federal Deposit Insurance Corporation
consented to Mr. Lane's continued service as a director and he was
re-elected a director at the 1994 annual meeting of shareholders.
I-5
COMMITTEES AND DIRECTOR ATTENDANCE
During the year ended December 31, 1997, the Board of Directors of Centura
held seven meetings. During 1997, each director attended 75% or more of the
aggregate of Board of Directors meetings and meetings of committees of the
Board of Directors on which he served.
The Executive Committee is composed of Messrs. Mauldin (Chairman),
Futrell, Kincheloe, Nelson, Parks, Redding, Sewell, Thorpe and Wilkins. As
noted above, Messrs. Futrell and Mauldin have resigned from the Centura board
of directors, effective the date of the Annual Meeting. Messrs. Futrell and
Mauldin will not be replaced as Executive Committee members. The Executive
Committee reviews overall strategic plans developed by management, deals with
tactical issues relating to corporate development, and acts on behalf of the
Board of Directors between Board meetings. The Board of Directors subsequently
reviews the actions taken by the Executive Committee and either approves,
disapproves, or modifies those actions. During 1997, the Executive Committee
held ten meetings. The independent director members of the Executive Committee
also serve as the Nominating Committee of the Board of Directors. Centura's
Bylaws provide that nominations to the Board of Directors may be made by the
Board of Directors or by a committee of the Board of Directors to which such
duty is delegated. Nominations recommended by shareholders are not considered
by the Nominating Committee. During 1997, the Nominating Committee held one
meeting.
The Compensation and Benefits Committee (the "Compensation Committee") is
composed of Messrs. Redding (Chairman), Barnhardt, Beasley, and Bowers, none of
whom are Centura officers or employees. Mr. Betts was a member of the
Compensation Committee until the acquisition of Betts & Company by Centura in
November 1997, at which time he resigned from the committee. The Compensation
Committee meets on call for the purpose of reviewing management's compensation
and benefit plans and making recommendations in connection therewith to the
Board of Directors. During 1997, the Compensation Committee held six meetings.
The Audit Committee is composed of Messrs. Stronach (Chairman), Bowers,
High, Hooker and Reeves, none of whom are Centura officers or employees. The
Audit Committee meets on call and is charged with ensuring that sufficient
internal controls and accounting procedures are in existence and functioning
properly for Centura and its subsidiaries. The Audit Committee also recommends
the appointment of independent auditors and serves as an independent body to
review, with or without the presence of management, the reports of regulatory
agencies, external auditors, and internal auditors. The Audit Committee
monitors management's action on recommendations made by auditors or examiners
to ensure timeliness and appropriateness of response. Recommendations made by
the Audit Committee and actions taken by management on such recommendations are
reported to the Board of Directors. During 1997, the Audit Committee held four
meetings.
Other regular or special committees may be appointed by the Board of
Directors to assist the Board in carrying out its duties and responsibilities.
SECURITIES OWNERSHIP
Except for the Centura Bank Trust Department, which, as of February 27,
1998, held 1,321,548 shares of Centura Common Stock in a fiduciary capacity, or
5.1% of the total shares of Centura Common Stock outstanding as of February 27,
1998, and which, therefore, may be deemed to be a beneficial owner of such
shares, Centura knows of no other persons who beneficially own more than five
percent of the outstanding Centura Common Stock.
I-6
The following table shows the number of outstanding shares of Centura
Common Stock beneficially owned on February 27, 1998, by the individual
nominees and directors of Centura, by the executive officers of Centura, and by
the nominees, directors and executive officers as a group. It is anticipated
that the directors and executive officers of Centura and their affiliates will
vote their shares in favor of the proposals presented at the Annual Meeting.
Individuals have sole voting and investment power over their shares unless
otherwise indicated in the footnotes.
Amount of and Percent
Nature of of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------------------------------- ---------------------- --------
Richard H. Barnhardt 19,643 (1) *
C. Wood Beasley 51,083 (2) *
Thomas A. Betts, Jr. 74,993 (3) *
H. Tate Bowers 22,377 (4) *
Ernest L. Evans 13,264 (5) *
Bernard W. Franklin 0 (6) *
Steven J. Goldstein 3,518 (7) *
Susan E. Gravely 0 (8) *
John H. High 39,956 (9) *
Michael K. Hooker 1,610 (10) *
Robert L. Hubbard 53,642 (11) *
William H. Kincheloe 38,424 (12) *
H. Kel Landis III 18,235 (13) *
Charles T. Lane 29,590 (14) *
Robert R. Mauldin 311,241 (15) 1.20
Joseph H. Nelson 24,919 (16) *
Dean E. Painter, Jr. 1,273,514 (17) 4.90
O. Tracy Parks III 127,716 (18) *
Frank L. Pattillo 45,403 (19) *
William H. Redding, Jr. 21,613 (20) *
Charles M. Reeves III 118,331 (21) *
Cecil W. Sewell, Jr. 131,724 (22) *
George T. Stronach III 50,040 (23) *
Alexander P. Thorpe III 78,414 (24) *
William H. Wilkerson 49,439 (25) *
Charles D. Wilkins 413,853 (26) 1.59
All nominees, directors and executive officers
as a group (27 persons) 11.7%
- ---------
o Less than 1%.
(1) Includes 1,000 shares with respect to which Mr. Barnhardt has no voting or
investment power and 9,925 shares that he has the right to acquire through
the exercise of stock options.
(2) Includes 8,499 shares that Mr. Beasley has the right to acquire through the
exercise of stock options.
(3) Includes 13,396 shares with respect to which Mr. Betts has no voting or
investment power, and 9,782 shares which he has the right to acquire
through the exercise of stock options.
(4) Includes 402 shares with respect to which Mr. Bowers has no voting or
investment power and 2,831 shares that he has the right to acquire through
the exercise of stock options.
(5) Includes 9,209 shares that Mr. Evans has the right to acquire through the
exercise of stock options.
(6) If elected, Dr. Franklin intends to apply his initial retainer to the
purchase of Centura Common Stock and to apply all or a substantial portion
of his future retainers and fees to such purchase, either directly or
through the Directors' Deferred Compensation Plan.
(7) Includes 38 shares that Mr. Goldstein has the right to acquire through the
exercise of stock options and 1,169 shares held in the 401(k) Plan as to
which he is entitled to direct the Trustee as to the manner in which the
shares are voted.
(8) If elected, Ms. Gravely intends to apply her initial retainer to the
purchase of Centura Common Stock and to apply all or a substantial portion
of her future retainers and fees to such purchase, either directly or
through the Directors' Deferred Compensation Plan.
(9) Includes 7,920 shares with respect to which Mr. High has no voting or
investment power and 8,015 shares which he has the right to acquire
through the exercise of stock options.
(10) Includes 1,410 shares that Dr. Hooker has the right to acquire through the
exercise of stock options.
I-7
(11) Includes 290 shares with respect to which Mr. Hubbard has no voting or
investment power, 39,506 shares with respect to which he shares voting and
investment power, and 11,662 shares that he has the right to acquire
through the exercise of stock options.
(12) Includes 6,390 shares with respect to which Mr. Kincheloe has no voting or
investment power and 9,090 shares that he has the right to acquire through
the exercise of stock options.
(13) Includes 376 shares with respect to which Mr. Landis has no voting or
investment power, 1,600 shares with respect to which he shares voting and
investment power, 11,620 shares that he has the right to acquire through
the exercise of stock options, and 3,284 shares held in the 401(k) Plan as
to which he is entitled to direct the Trustee as to the manner in which
the shares are voted.
(14) Includes 11,573 shares that Mr. Lane has the right to acquire through the
exercise of stock options.
(15) Includes 1,005 shares with respect to which Mr. Mauldin has no voting or
investment power, 22,580 shares with respect to which he shares voting and
investment power, 210,997 shares that he has the right to acquire through
the exercise of stock options, and 29,998 shares held in the 401(k) Plan
as to which he is entitled to direct the Trustee as to the manner in which
the shares are voted.
(16) Includes 1,485 shares with respect to which Mr. Nelson has no voting or
investment power, 4,499 with respect to which he shares voting and
investment power, and 12,863 shares that he has the right to acquire
through the exercise of stock options.
(17) Includes 636,757 shares with respect to which Mr. Painter has no voting or
investment power.
(18) Includes 9,376 shares that Mr. Parks has the right to acquire through the
exercise of stock options.
(19) Includes 4,073 shares that Mr. Pattillo has the right to acquire through
the exercise of stock options and 3,378 shares held in the 401(k) Plan as
to which he is entitled to direct the Trustee as to the manner in which
the shares are voted.
(20) Includes 10,219 shares with respect to which Mr. Redding shares voting and
investment power, and 11,294 shares that he has the right to acquire
through the exercise of stock options.
(21) Includes 10,013 shares that Mr. Reeves has the right to acquire through
the exercise of stock options.
(22) Includes 1,659 shares with respect to which Mr. Sewell has no voting or
investment power, 18,880 shares with respect to which he shares voting and
investment power, 30,428 shares that he has the right to acquire through
the exercise of stock options, and 8,659 shares held in the 401(k) Plan as
to which he is entitled to direct the Trustee as to the manner in which
the shares are voted.
(23) Includes 1,485 shares with respect to which Mr. Stronach has no voting or
investment power, 15,167 shares with respect to which he shares voting and
investment power and 3,889 shares that Mr. Stronach has the right to
acquire through the exercise of stock options.
(24) Includes 60 shares with respect to which Mr. Thorpe has no voting or
investment power, 62,260 shares with respect to which he shares voting and
investment power and 10,041 shares that he has the right to acquire
through the exercise of stock options.
(25) Includes 315 shares with respect to which Mr. Wilkerson has no voting or
investment power, 26,770 shares that Mr. Wilkerson has the right to
acquire through the exercise of stock options, and 9,664 shares held in
the 401(k) Plan as to which he is entitled to direct the Trustee as to the
manner the shares are voted.
(26) Includes 35,178 shares with respect to which Mr. Wilkins shares voting and
investment power, and 2,837 shares that Mr. Wilkins has the right to
acquire through the exercise of stock options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), Centura's directors, certain officers,
and any person holding more than 10% of Centura Common Stock are required to
report their ownership of Centura Common Stock and any changes in that
ownership to the Securities and Exchange Commission and the NYSE. Specific due
dates for these reports have been established, and Centura is required to
report in this proxy statement any failure to file by these dates during 1997.
All of these filing requirements were satisfied during 1997 by Centura's
directors and officers, except the following:
Joseph L. Wallace, a Director, sold 3,000 shares of Centura in September
1997, which transaction was reported in November, 1997. Steven J. Goldstein,
Chief Financial Officer, took office in February 1997 but did not file a Form 3
filing until March, when he made his first purchase of Centura stock. William
H. Kincheloe, a Director, made purchases under the Centura Dividend
Reinvestment Plan in 1995 and 1996 that were not reported until August 1997,
which resulted in late filings for the years 1995 and 1996, not 1997. William
D. Hoover, a Director, sold 1,500 shares in October 1997, which transaction was
reported on Form 4 in February 1998. Charles P. Wilkins, a Director, became
executor of the estate of his brother in June 1997, in which capacity he has
voting and dispositive power with respect to 200,695 shares of Centura Common
Stock in such estate. This change in beneficial ownership was not reported on
either Form 4 or Form 5 in 1997 through an oversight. It was reported on Form 4
in February 1998.
DIRECTORS' COMPENSATION
Each director, except those who are officers of Centura, receives an
annual retainer fee of $7,500 plus $750 for each meeting of the Board of
Directors attended and $750 for each committee meeting of the Board of
Directors attended. In addition, each Chairman of a Centura Board committee,
who is not an employee, receives an additional annual retainer of $1,000.
Directors also are reimbursed for their travel expenses incurred to attend
meetings, which, in the aggregate, amounted to approximately $39,600 in 1997.
I-8
In 1995, the Board of Directors approved an addition to the compensation
described above to incorporate an incentive component based on the achievement
by Centura of its Economic Value Added ("EVA(R)1") target. (See "BOARD
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION -- The Economic Value
Added Incentive Program.") The incentive component provides for a bonus of 50%
of fees paid during the year if Centura meets its EVA target, with adjustments
(both up and down) if such target is exceeded or is not met. As more fully
discussed below, Centura exceeded its EVA target for 1997 and, accordingly,
Centura directors received aggregate bonus compensation in the amount of
$401,405. All but two of the directors deferred such compensation through the
Directors' Deferred Compensation Plan (discussed below).
Certain directors are eligible to participate in the Directors' Deferred
Compensation Plan (for purposes of this section, the "Plan"). The Plan provides
non-employee members of the Board of Directors of Centura and Centura Bank with
an opportunity to defer for income tax purposes the payment of directors' fees.
Under the Plan, directors may elect to receive directors' fees in the form of
an option to buy Centura Common Stock, rather than in cash. The Plan does not
provide directors any additional compensation or benefits, except for the
beneficial effect of the deferral of income. The Plan is administered by the
Compensation Committee which has full authority and sole discretion to
interpret and construe the Plan, including setting rules and regulations
related thereto, and making determinations and taking actions necessary for its
implementation and administration. Options to purchase 20,439 shares of Centura
Common Stock were granted under the Plan during 1997 (including grants relating
to the incentive component of director compensation) to all eligible directors
who chose to participate in the Plan as a group (20 persons).
In addition, until January 1, 1998, Centura maintained an unfunded
Directors' Retirement Pay Plan (the "Director Plan") for non-employee directors
of Centura and Centura Bank. Under this plan, non-employee directors who had
served on the Board of Directors of Centura or Centura Bank, or on the Board of
Directors of certain corporate predecessors of Centura or Centura Bank, for a
minimum of sixty consecutive calendar months were eligible to receive benefits
upon retirement or disability. Upon retirement at or after age 65, an eligible
director would receive annually an amount equal to his base retainer fee as of
the date of retirement (the "Base Amount"), payable in quarterly installments
until the first to occur of the death of the participating director or the
expiration of a period equal to his length of service to Centura, Centura Bank,
or one of its corporate predecessors. An eligible director who retired prior to
age 65 was eligible to receive the Base Amount reduced by 5% for each year
remaining before he would have reached age 65, but not less than 50% of the
Base Amount, payable as described above. In the event of disability, an
eligible director with twenty years of service was entitled to the full Base
Amount, payable as described above; an eligible director with less than twenty
years of service was entitled to an amount equal to the Base Amount times a
fraction, the numerator of which equaled his years of service and the
denominator of which equaled the number of years of service the director would
have had if he served until age 70, payable as described above.
In addition to its recommendations regarding Board structure, discussed
above under "ELECTION OF DIRECTORS," the Corporate Governance Committee
recommended that the Director Plan be terminated. Accordingly, at its meeting
on December 17, 1997, the Board of Directors terminated the Director Plan,
effective January 1, 1998 (the "Termination Date"), provided that directors
covered by the Director Plan who retired before the Termination Date will
continue to receive payments under the Plan in accordance with the terms of the
Plan at their retirement. In addition, in connection with the termination of
the Plan, the Board authorized the payment to each director previously covered
by the Plan who had not retired on or before the Termination Date of an amount
equal to the present value of the expected future payout to such director under
the Plan, based on years of service at the Termination Date and actuarially
determined life expectancy, such amount to be paid in cash or discounted stock
options at such director's election. Options to purchase 7,668 shares of
Centura Common Stock were issued to directors in connection with the
termination of the Director Plan.
- ---------
1 EVA(R) is a registered trademark of Stern Stewart & Co.
I-9
EXECUTIVE OFFICERS
The following table sets forth the name, age, and position of the
executive officers of Centura. Each executive officer named below was appointed
by the Board of Directors of Centura to a term of office extending until the
death, resignation, retirement, removal, or disqualification of the officer or
until the officer's successor is appointed and qualifies. The business
backgrounds of the officers named below are included in the table of directors
of Centura above, except with respect to Messrs. Goldstein, Landis, and Rogers,
which are provided below.
Name Age (1) Position
- -------------------------------- --------- ---------------------------------------------------
Cecil W. Sewell, Jr. (2) 51 Chairman of the Board, Chief Executive Officer and
President
Frank L. Pattillo 55 Group Executive Officer
William H. Wilkerson 51 Group Executive Officer
Steven J. Goldstein (3) 46 Chief Financial Officer
H. Kel Landis III (4) 41 Group Executive Officer
B. Thomas Rogers, Jr. (5) 46 Group Executive Officer
- ---------
(1) As of April 15, 1998.
(2) Mr. Sewell assumed the offices of Chairman of the Board and Chief Executive
Officer on February 2, 1997. Prior to that time, he served as President
and Chief Operating Officer.
(3) Mr. Goldstein was elected Chief Financial Officer of Centura, effective
February 1, 1997. Prior to that, he was a principal of A.T. Kearney, Inc.;
a principal of EDS Management Consulting Services; a managing director of
BEI/Golumbe, Inc.; and a managing director of Kaplan Smith & Associates;
each of such firms being engaged in management consulting.
(4) Mr. Landis was elected a Group Executive Officer in April 1996. From April
1995 to April 1996, he was an Executive Vice President. Prior to that he
was an Executive Vice President of Centura Bank.
(5) Mr. Rogers was elected a Group Executive Officer in April 1996. From April
1995 to April 1996, he was an Executive Vice President. Prior to that, he
was an Executive Vice President of Centura Bank.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee has furnished the following report on executive
compensation in accordance with the rules of the Securities and Exchange
Commission. As noted above under "Committees and Director Attendance," the
Compensation Committee reviews management's compensation and benefit plans and
makes recommendations regarding such plans to the Board of Directors. Review of
and recommendations regarding executive compensation are a significant part of
that responsibility. Set forth below is a summary of the factors taken into
account by the Compensation Committee in assessing executive compensation
generally and the compensation of the Chief Executive Officer in particular.
COMPENSATION OF EXECUTIVE OFFICERS. In general, the performance-related
components of executive compensation at Centura are base salary and payments
under the incentive and equity compensation programs described below. Base
salary is determined on the basis of the position held by the executive and is
assessed in comparison to the salaries of similarly situated executives at
three selected financial institutions in North Carolina and a sample of
thirty-three comparable financial institutions throughout the United States
with assets between $5.3 and $19 billion. Adjustments to base salary are made
on the basis of the recommendations of the Chief Executive Officer based on the
overall contribution of the executive to the attainment of Centura's financial
goals and such executive's record of achievement in directing the activities
for which such executive is responsible. Such adjustments are reviewed in light
of the salaries of comparable executives in the peer groups referred to above.
Generally, such comparison is on the basis of entire compensation, including
bonus, and is targeted at the median of salaries of comparable executives in
the peer groups referred to above. No specific weighting is assigned to the
various factors analyzed in determining the base compensation of executive
officers of Centura.
THE ECONOMIC VALUE ADDED INCENTIVE PROGRAM. In 1994, Centura adopted the
EVA incentive program (the "Incentive Program"), the purpose of which is to
provide incentive compensation to certain key employees, including all
executive officers, in a form which relates the financial reward to an increase
in the value of Centura to its shareholders. In general, EVA is the net
operating profit of Centura after taxes, less a capital charge. The capital
charge is intended to represent the return expected by the providers of
Centura's debt and equity capital, and is determined by Centura's financial
consultant on the basis of a formula that takes into account the risk and cost
of providing such capital. Management is of the view that EVA improvement is
the financial performance measure most closely correlated with an increase in
shareholder wealth. EVA improvement can be achieved through operations in three
ways: (i) growth of after-tax operating profits on existing capital; (ii)
investment in projects or businesses that generate a positive return after
taking into account the cost of capital; and (iii) divestiture of businesses
that do not generate a positive return after capital cost.
I-10
Under the Incentive Program, the Chief Executive Officer and five other
senior officers of Centura (including the executive officers listed in the
Summary Compensation Table below) comprise the "Strategic Group." For each
member of the Strategic Group, a Target Bonus is declared at the commencement
of each year, which Target Bonus is based on a percentage of the executive's
base salary. Bonuses earned under the Incentive Program are determined by
multiplying the Target Bonus by a Bonus Multiple derived by comparing target
and actual EVA for the year in question and adjusted for a "leverage factor"
that reflects the expected variability of Centura's performance based on
historical factors. The Incentive Program determines target EVA for succeeding
years of the program by a formula that adds the average of target and actual
EVA for the prior year to an expected improvement factor. For 1997, the
expected improvement factor was $1,700,000 per year, resulting in a target EVA
of $4,060,000.
The average of the Target Bonuses for 1997 for all members of the
Strategic Group was set at 37.5% of base salary. Actual EVA for 1997 exceeded
target EVA; as a result, the average of actual bonuses earned for 1997 by
members of the Strategic Group was 64.5% of base salary, or approximately 1.72
times Target Bonus. Pursuant to the Incentive Program, 1997 bonus amounts
earned by each participant were applied as follows: (i) the Target Bonus amount
was paid in 1998; (ii) one-third of the actual bonus amount in excess of the
Target Bonus amount was paid in 1998; and (iii) two-thirds of the actual bonus
amount in excess of the Target Bonus amount was added to a "bonus bank"
comprised of excess bonus amounts earned by the participant in prior years that
remain at risk. One-third of each participant's aggregate "bonus bank" amount
was paid in 1998 in addition to the amounts referred to in the preceding
sentence. The remaining "bonus bank" amount will be paid in future years,
subject to reduction or loss if actual EVA in those years results in bonus
determinations that are less than zero.
In addition to the foregoing, 20% of the 1997 bonus amounts paid to
Strategic Group executives was withheld and used to purchase leveraged stock
options ("LSOs") on Centura Common Stock to be issued under the Omnibus Plan.
The purchase price paid by each executive for each LSO issued in respect of
Incentive Program performance for 1997 was $2.69, with the balance of the
acquisition price of the underlying shares of Centura Common Stock comprising
the option exercise price described below. The option purchase price is 10% of
the closing price of Centura Common Stock as reported on the NYSE Composite
Tape on the date of issue, January 20, 1998 ($70), which amount is then indexed
to the budgeted wage inflation rate. Indexation of the LSO purchase price was
instituted in 1997 to increase the number of shares subject to option under the
Incentive Program, which number had been materially reduced by increases in the
market price of Centura Common Stock over the last several years. This
circumstance had created the anomalous result of reducing the number of shares
subject to options granted to Incentive Program participants during a period of
superior performance. As described below, the features of the program incenting
management to continue to increase shareholder value remain in place.
The 1997 LSO's vest in equal annual installments in January 1999, 2000,
2001, 2002 and 2003 and expire in January 2008. The initial exercise price of
the 1997 LSO's is $67.31 (the closing price on the date of issue, $70, less the
option purchase price, $2.69), which shall remain in effect for one year from
the date of issue. For each year thereafter during the option term, the
exercise price will increase as shown below, which increase is intended to
reflect the minimum expected increase in value for holders in Centura Common
Stock. Accordingly, the exercise price for the 1997 LSO's during the period in
which all or a portion of them are vested will be as follows:
For the Year Commencing LSO Exercise
January Price
- ------------------------- -------------
1999 $ 71.44
2000 75.81
2001 80.46
2002 85.38
2003 90.62
2004 96.17
2005 102.06
2006 108.31
2007 114.95
I-11
Equity Compensation Program
In addition to the Incentive Program mentioned above, the Compensation
Committee authorized an equity compensation program (the "Equity Compensation
Program") in 1997 to reward and retain selected officers and employees of
Centura. This action was taken as the result of a study conducted during 1997
by the committee that highlighted the expanding utilization of equity grants as
a significant element of total direct compensation by firms with whom Centura
competes for talent in the marketplace. The study confirmed the experience of
Centura management that Centura was operating at a distinct disadvantage
because of its suboptimum use of equity-based compensation. Under the Equity
Compensation Program, non-qualified stock options are granted to selected
officers and employees at all levels of the corporation for a ten year term
which options will be awarded at market price and vest over eight years as
follows: 10% per year at the end of each of the first six years; 15% at the end
of the seventh year; and 25% at the end of the eighth year. Grants made under
the Equity Compensation Program in respect of 1997 performance were awarded in
January 1998. Named Executive Officers were awarded options (the value of which
was a percentage of base compensation, with the number of shares determined by
use of the Black-Scholes valuation model) in respect of 114,750 shares of
Centura Common Stock, together with cash performance units having an aggregate
value of $592,110, exercisable at the time of exercise of such options pro rata
with the amount of options exercised. It is the intention of the Compensation
Committee to award additional options and performance units under the Equity
Compensation Plan in respect of performance in 1998 and 1999. The amount of
options awarded for such years and thereafter is discretionary with the
committee and will be made on the basis of Centura's financial and operating
performance and the requirements of the corporation to attract, retain and
motivate the management talent necessary to remain competitive.
COMPENSATION OF MR. SEWELL AS CHIEF EXECUTIVE OFFICER. In setting Mr.
Sewell's 1997 base salary as Chairman of the Board and Chief Executive Officer
of Centura, consideration was given to Centura's financial performance in light
of its historical performance, corporate and personal goals established at the
beginning of the year in question, and comparison against a select group of
comparable financial institutions. Return on assets and equity and earnings per
share on an absolute and comparative basis were considered, as were such other
factors as loan losses, capital investment and acquisitions. After reviewing
performance data, base salary information for chief executive officers of
comparable financial institutions was analyzed. Adjustments to base salary were
then considered in light of corporate performance and the relationship of such
compensation to the peer group. No specific weighting was assigned to these
various factors analyzed in determining Mr. Sewell's base salary. During 1997,
Mr. Sewell's base salary was $375,000. In addition, under the Incentive
Program, Mr. Sewell's Target Bonus was 45% of Base Salary. As a result of
Centura's performance in 1997, Mr. Sewell received a bonus of 1.72 times his
Target Bonus, of which $185,970 was paid in cash in 1998, and $46,493 was
applied to the purchase of LSOs in respect of 17,296 shares of Centura Common
Stock. Further, under the Incentive Program $57,790 was added to the $69,640
already credited to Mr. Sewell's "bonus bank" account, resulting in $127,430
being credited to that account, which remains at risk as described above.
Finally, under the Equity Compensation Plan, Mr. Sewell was granted options in
respect of 37,500 shares of Centura Common Stock and performance units of
$193,500 in respect of such options.
COMPENSATION OF MR. MAULDIN AS CHIEF EXECUTIVE OFFICER. Mr. Mauldin served
as Chairman of the Board and Chief Executive Officer during 1997 from January 1
until his retirement on February 2, 1997. Until his retirement, Mr. Mauldin's
base salary was at the rate of $400,000 per year, pursuant to an employment
agreement with Centura. Upon his retirement, Mr. Mauldin's employment agreement
terminated; Mr. Mauldin received the first of three grants of 20,000 shares
each of Centura Common Stock pursuant to a Stock Grant Agreement with Centura;
a non-qualified stock option grant in respect of 140,000 shares of Centura
Common Stock previously made under the Omnibus Plan was no longer subject to
forfeiture; Mr. Mauldin became eligible for certain payments under a
Supplemental Executive Retirement Plan Agreement; and $106,350 previously held
in Mr. Mauldin's "bonus bank" account under the Incentive Program was paid to
him. Mr. Mauldin did not receive further compensation as chief executive
officer of Centura in 1997.
OTHER COMPENSATION ISSUES. In addition to the foregoing components of
executive compensation, the Compensation Committee reviews, on an on-going
basis, other components of compensation, such as benefits and perquisites. In
all cases, the objective of the Compensation Committee is to assist senior
management in attracting, motivating, and retaining qualified executive
personnel.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Congress has enacted Section
162(m) of the Code, which disallows a tax deduction for any publicly-held
corporation for remuneration exceeding $1 million in any tax year for the Chief
Executive Officer and other executive officers named in the Summary
Compensation Table. Regulations promulgated by the Internal Revenue Service
pursuant to this section of the Code provide exceptions to non-deductibility
for certain "performance based compensation," including equity based
compensation, if performance goals are set by an independent compensation
committee and the terms of the compensation plan are approved by shareholders.
In 1997, the Centura Board of Directors adopted
I-12
and the shareholders approved an amendment to the Omnibus Equity Compensation
Plan to authorize types of awards that would be eligible for the "performance
based compensation" exception to Section 162(m). While the Omnibus Equity
Compensation Plan has received shareholder approval in the past, the Incentive
Program, the Equity Compensation Program and the compensation and benefits of
the chief executive officer and other executive officers of Centura have not
been submitted to shareholders for approval.
CENTURA BANKS, INC. COMPENSATION COMMITTEE
WILLIAM H. REDDING, JR., CHAIRMAN RICHARD H. BARNHARDT
C. WOOD BEASLEY H. TATE BOWERS
I-13
EXECUTIVE COMPENSATION
The following tables set forth the annual and long-term compensation
awarded to, earned by, or paid to Messrs. Mauldin and Sewell, each of whom
served as Centura's Chief Executive Officer during 1997, and the four other
most highly compensated officers (collectively, the "Named Executive Officers"
December 31, 1997, 1996 and 1995, for services rendered in any capacities to
Centura and/or its subsidiaries. Bonuses are paid in January of the year
following the year in which they are earned.
SUMMARY COMPENSATION TABLE
Annual Compensation
------------------------------------------
Other
Annual
Name and Salary Bonus Compensation
Principal Position Year ($) ($) ($)(a)
- ------------------------------- ------ ---------- ---------------- --------------
Robert R. Mauldin 1997 33,333 132,150(d) 0
Chairman of the Board 1996 400,000 133,360 0
and Chief Executive Officer 1995 375,000 180,894(g) 42,129
Cecil W. Sewell, Jr. 1997 375,000 122,260 0
Chairman of the Board 1996 325,000 89,240 0
and Chief Executive Officer 1995 300,000 136,264(l) 42,129
[effective 2/2/97]
William H. Wilkerson 1997 230,000 61,390 0
Group Executive Officer 1996 210,000 49,850 0
1995 180,000 64,657(o) 16,860
H. Kel Landis, III 1997 215,000 57,800 0
Group Executive Officer 1996 180,000 40,170 0
1995 150,000 46,400(r) 10,162
Frank L. Pattillo 1997 210,000 56,010 0
Group Executive Officer 1996 190,000 45,020 0
1995 180,000 63,058(v) 15,512
Steven J. Goldstein 1997 204,500 58,430 0
Chief Financial Officer
[effective 2/1/97]
Long-Term Compensation
--------------------------------------
Awards Payouts
---------------------------- ---------
Restricted Securities
Stock Underlying LTIP All Other
Name and Awards Options/ Payouts Compensation
Principal Position ($)(b) SARS(#) ($)(c) ($)
- ------------------------------- ------------ --------------- --------- ---------------
Robert R. Mauldin 0 0 0 65,233(e)
Chairman of the Board 0 10,784 53,180 28,818(f)
and Chief Executive Officer 2,000,000 10,776 20,510 20,264(h)
Cecil W. Sewell, Jr. 0 54,796(i) 63,710 26,687(j)
Chairman of the Board 0 7,171 34,820 4,750(k)
and Chief Executive Officer 0 7,040 12,650 4,620(k)
[effective 2/2/97]
William H. Wilkerson 0 26,070(m) 33,440 15,711(n)
Group Executive Officer 0 4,011 19,530 4,750(k)
0 3,688 7,170 4,620(k)
H. Kel Landis, III 0 24,217(p) 29,210 19,659(q)
Group Executive Officer 0 3,199 15,180 4,750(k)
0 2,676 5,000 4,620(k)
Frank L. Pattillo 0 23,817(s) 30,730 17,368(t)
Group Executive Officer 0 3,650 18,120 5,276(u)
0 3,688 7,170 4,899(w)
Steven J. Goldstein 0 22,918(x) 18,650 10,778(y)
Chief Financial Officer
[effective 2/1/97]
- ---------
(a) Amounts reimbursed for payment of taxes on stock awards following
satisfaction of required performance goals.
(b) Robert R. Mauldin was the only Named Executive Officer to receive a
restricted stock grant during the periods in question. The grant of 60,000
shares of Centura Common Stock was valued at the time of grant at
$2,000,000. Effective November 20, 1996, Mr. Mauldin entered into a Stock
Grant Agreement with Centura that superseded the Restricted Stock Award
Agreement pursuant to which the restricted stock grant was made. The Stock
Grant Agreement modified the terms of the original grant of Centura Common
Stock to Mr. Mauldin.
(c) Comprises the sum of (i) 1/3 of the Bonus amount in excess of the Target
Bonus for the executive in question, plus (ii) 1/3 of the amount credited
for such executive in the "bonus bank" for prior years. See "BOARD
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION -- THE ECONOMIC
VALUE ADDED INCENTIVE PROGRAM."
(d) Includes $106,350 banked bonus which was paid upon Mr. Mauldin's
retirement.
(e) Consists of matching contributions of $3,298 made by Centura and allocated
to Mr. Mauldin under the 401(k) Plan, $32,307 of above-market rate
interest credited during 1997 on compensation deferred by Mr. Mauldin
under the Centura Banks, Inc. Deferred Compensation Plan (the "Deferred
Compensation Plan"), and $29,628 which represents present value of the
yearly interest foregone on the non-term premium paid under a split-dollar
life insurance arrangement.
(f) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Mauldin under the 401(k) Plan and $24,068 of above-market rate
interest credited during 1996 on compensation deferred by Mr. Mauldin
under the Deferred Compensation Plan.
(g) Includes stock bonuses in the amount of 2,094 shares valued at fair market
value of $49,994 (value calculated by multiplying the closing price of
Centura Common Stock reported on the NYSE Composite Tape on the date of
grant by the number of shares awarded).
(h) Consists of matching contributions of $4,620 made by Centura and allocated
to Mr. Mauldin under the 401(k) Plan and $15,644 of above-market rate
interest credited during 1995 on compensation deferred by Mr. Mauldin
under the Deferred Compensation Plan.
(i) Consists of 17,296 leveraged options earned under the EVA Incentive Program
and 37,500 options awarded under the Equity Compensation Program.
(j) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Sewell under the 401(k) Plan, and $21,937 which represents present
value of the yearly interest foregone on the non-term premium paid under a
split-dollar life insurance arrangement.
(k) Consists of matching contributions made by Centura and allocated to the
respective Named Executive Officer under the 401(k) Plan.
I-14
(l) Includes stock bonuses in the amount of 2,094 shares valued at fair market
value of $49,994 (value calculated by multiplying the closing price of
Centura Common Stock reported on the NYSE Composite Tape on the date of
grant by the number of shares awarded).
(m) Consists of 8,820 leveraged options earned under the EVA Incentive Program
and 17,250 options awarded under the Equity Compensation Program.
(n) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Wilkerson under the 401(k) Plan, and $10,961 which represents
present value of the yearly interest foregone on the non-term premium paid
under a split-dollar life insurance arrangement.
(o) Includes stock bonuses in the amount of 838 shares valued at fair market
value of $20,007 (value calculated by multiplying the closing price of
Centura Common Stock reported on the NYSE Composite Tape on the date of
grant by the number of shares awarded).
(p) Consists of 8,092 leveraged options earned under the EVA Incentive Program
and 16,125 options awarded under the Equity Compensation Program.
(q) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Landis under the 401(k) Plan, and $14,909 which represents present
value of the yearly interest foregone on the non-term premium paid under a
split-dollar life insurance arrangement.
(r) Includes stock bonuses in the amount of 578 shares valued at fair market
value of $13,800 (value calculated by multiplying the closing price of
Centura Common Stock reported on the NYSE Composite Tape on the date of
grant by the number of shares awarded).
(s) Consists of 8,067 leveraged options earned under the EVA Incentive Program
and 15,750 options awarded under the Equity Compensation Program.
(t) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Pattillo under the 401(k) Plan, $1,062 of above-market rate
interest credited during 1997 on compensation deferred by Mr. Pattillo
under the Deferred Compensation Plan, and $11,556 which represents present
value of the yearly interest foregone on the non-term premium paid under a
split-dollar life insurance arrangement.
(u) Consists of matching contributions of $4,750 made by Centura and allocated
to Mr. Pattillo under the 401(k) Plan and $526 of above-market rate
interest credited during 1996 on compensation deferred by Mr. Pattillo
under the Deferred Compensation Plan.
(v) Includes stock bonuses in the amount of 771 shares valued at fair market
value of $18,408 (value calculated by multiplying the closing price of
Centura Common Stock reported on the NYSE Composite Tape on the date of
grant by the number of shares awarded).
(w) Consists of matching contributions of $4,620 made by Centura and allocated
to Mr. Pattillo under the 401(k) Plan and $279 of above-market rate
interest credited during 1995 on compensation deferred by Mr. Pattillo
under the Deferred Compensation Plan.
(x) Consists of 7,168 leveraged options earned under the EVA Incentive Program
and 15,750 options awarded under the Equity Compensation Program.
(y) Consists of matching contributions of $1,791 made by Centura and allocated
to Mr. Goldstein under the 401(k) Plan and $8,987 in consideration of
relocation expense.
The following table sets forth certain information concerning stock
options granted to the Named Executive Officers under the Incentive Program in
respect of performance in 1997 (see "BOARD COMPENSATION REPORT ON EXECUTIVE
COMPENSATION -- THE ECONOMIC VALUE ADDED INCENTIVE PROGRAM AND EQUITY
COMPENSATION PROGRAM"):
OPTION GRANTS IN RESPECT OF LAST FISCAL YEAR
Potential
Realizable Value
At Assumed Annual
Number of % of Total Rates of Stock Price
Securities Options Exercise Appreciation for
Underlying Granted to or Base Option Term
Options Employees in Price Expiration --------------------------------------
Name Granted(#) Fiscal Year ($/Share) Date 5%($) 10%($)
- ----------------------- --------------- -------------- -------------- ----------- ----------------- -------------------
Robert R. Mauldin 0 N/A N/A N/A N/A N/A
Cecil W. Sewell, Jr. 17,296(a) 14% 67.31(b) 1/20/08 0(c) $ 1,031,360(d)
37,500(e) 12% 70.00(f) 1/20/08 $1,650,750 4,183,500
William H. Wilkerson 8,820(a) 7% 67.31(b) 1/20/08 0(c) 525,937(d)
17,250(e) 6% 70.00(f) 1/20/08 759,345 1,924,410
H. Kel Landis III 8,092(a) 6% 67.31(b) 1/20/08 0(c) 482,526(d)
16,125(e) 5% 70.00(f) 1/20/08 709,823 1,798,905
Frank L. Pattillo 8,067(a) 6% 67.31(b) 1/20/08 0(c) 481,035(d)
15,750(e) 5% 70.00(f) 1/20/08 693,315 1,757,070
Steven J. Goldstein 7,168(a) 6% 67.31(b) 1/20/08 0(c) 427,428
15,750(e) 5% 70.00(f) 1/20/08 693,315 1,757,070
- ---------
(a) Leveraged Stock Options (LSOs) granted under Incentive Program. See "BOARD
COMPENSATION COMMITTEE REPORT EXECUTIVE COMPENSATION -- THE ECONOMIC VALUE
ADDED INCENTIVE PROGRAM."
(b) Closing price of the shares of Centura Common Stock in respect of which
LSOs were granted on the date of grant ($70.00), less the purchase price
of $2.69 per share.
(c) Because LSOs are purchased for $2.69 per share covered by such options
(with a concomitant cost of such purchase price over the term of the
option) and because the option exercise price increases 6.1% per year over
the option term, an increase in the market value of Centura Common Stock
of 5% results in a realizable value of zero for such options.
I-15
(d) Computed on the assumption that each LSO is held for its full ten-year term
and exercised on the last day of such term at the then-applicable purchase
price of $114.95. Realizable value is determined by multiplying the number
of shares subject to the LSOs by the difference between (i) the value of
Centura Common Stock determined by assuming that its market price
increases at a rate of 10% per annum, compounded annually for ten full
years from the price at date of issue ($70), achieving a value at date of
exercise of $181.56 and (ii) a purchase price of $121.93 that is comprised
of (A) the option purchase price increased at the rate of 10% per annum,
compounded annually for ten years ($6.98); plus (B) the option exercise
price of $114.95.
(e) Non-qualified Stock Options granted under Equity Compensation Program. See
"BOARD COMPENSATION COMMITTEE REPORT EXECUTIVE COMPENSATION -- EQUITY
COMPENSATION PROGRAM."
(f) Closing price of the shares of Centura Common Stock in respect of which
Non-qualified Stock Options were granted on the date of grant ($70.00).
The following table summarizes the options exercised in 1997 by the Named
Executive Officers and the number and value of unexercised options at December
31, 1997.
AGGREGATED OPTIONS EXERCISED IN 1997 AND
YEAR-END OPTION VALUES
Value of Unexercised
Number of Securities In-The-Money
Underlying Unexercised Options at
Options at December 31, 1997($)(a)
Shares Acquired December 31, 1997(#) Exercisable/Unexercisa
Name on Exercise(#) Value Realized ($) Exercisable/Unexercisable ab
- -------------------------- ----------------- -------------------- ------------------------- ----------------------
Robert R. Mauldin ........ 30,000 1,347,120 206,000 36,493 8,352,902 1,379,165
Cecil W. Sewell, Jr. ..... 10,000 456,875 27,187 (b) 22,981 1,484,945 860,376
William H. Wilkerson ..... 10,000 456,875 25,000 13,009 1,359,350 490,619
Frank L. Pattillo ........ 3,524 107,335 8,240 (b) 12,648 471,878 479,764
H. Kel Landis III ........ 0 0 10,369 (b) 9,459 576,212 352,553
Steven J. Goldstein ...... 0 0 0 25,000 (c) 0 631,250
- ---------
(a) Value of unexercised in-the-money options is calculated by multiplying the
number of unexercised options at December 31, 1997 by the difference in
the closing price of Centura Common Stock reported on the NYSE Composite
Tape on December 31, 1997 and the exercise price of the unexercised
in-the-money options.
(b) Includes options earned through deferral of compensation.
(c) This is a diminishing stock option grant which will be exercisable only
upon a change of control where the acquiring entity owns at least 75% of
the shares in the new company. The grant will reduce to 16,666 shares
2/1/98, 8,333 shares 2/1/99 and 0 shares 2/1/00.
PENSION PLANS
Centura maintains a noncontributory, qualified pension plan (the "Centura
Pension Plan") covering substantially all employees of Centura and its
subsidiaries that adopt the plan (collectively referred to for purposes of this
section as "Centura"), who have completed one year of service and attained the
age of 21. Centura Bank is the Trustee of the Centura Pension Plan. The Centura
Pension Plan provides a participant with retirement benefits which in 1997 were
based on average compensation during all of the participant's years of credited
service after 1991. Under Sections 401(a)(17) and 415 of the Internal Revenue
Code of 1986, as amended (the "Code"), benefits payable from the Centura
Pension Plan are limited; for 1997, annual benefits may not exceed $125,000,
and the benefit formula cannot take into account compensation in excess of
$160,000 (these limits are adjusted by the Internal Revenue Service from time
to time for cost of living increases). Centura also maintains a
noncontributory, nonqualified supplemental executive retirement plan (the
"SERP"), which provides in part for the payment of additional pension benefits
(the "Excess Benefits") to certain executive employees, including the Named
Executive Officers, to the extent their benefits under the Centura Pension Plan
are reduced on account of the Code limits described above and also provides
additional pension benefits relating to deferred compensation, which is not
provided in the Centura Pension Plan. The Summary Compensation Table set forth
above does not include the amount of the pension contribution, payment or
accrual with respect to the Centura Pension Plan or the Excess Benefit for any
Named Executive Officer, as such amounts cannot readily be separately or
individually calculated by Centura's actuaries.
The following table illustrates the estimated annual benefits payable to
an employee retiring on December 31, 1997 at normal retirement age from a
combination of the Centura Pension Plan and the Excess Benefit portion of the
SERP, in the following specified compensation and years of service
classifications.
I-16
CENTURA PENSION PLAN AND EXCESS BENEFIT TABLE
Years of Service
Average ---------------------------------------------------------------------
Compensation 15 20 25 30 35 40
- ------------- --------- --------- --------- --------- --------- ---------
$ 125,000 30,715 40,953 51,192 61,430 61,430 61,430
$ 150,000 37,465 49,953 62,442 74,930 74,930 74,930
$ 175,000 44,215 58,953 73,692 88,430 88,430 88,430
$ 200,000 50,965 67,953 84,942 101,930 101,930 101,930
$ 225,000 57,715 76,953 96,192 115,430 115,430 115,430
$ 250,000 64,465 85,953 107,442 128,930 128,930 128,930
$ 300,000 77,965 103,953 129,942 155,930 155,930 155,930
$ 400,000 104,965 139,953 174,942 209,930 209,930 209,930
$ 450,000 118,465 157,953 197,442 236,930 236,930 236,930
$ 500,000 131,965 175,953 219,942 263,930 263,930 263,930
$ 550,000 145,465 193,953 242,442 290,930 290,930 290,930
$ 600,000 158,965 211,953 264,942 317,930 317,930 317,930
$ 650,000 172,465 229,953 287,442 344,930 344,930 344,930
Covered compensation under the Centura Pension Plan and under the Excess
Benefit portion of the SERP is gross salary and wages reportable on Form W-2,
including salary reduction contributions to Centura's 401(k) and Flexible
Benefits Plans, incentive pay, overtime and bonuses, but excluding non-cash
items, fringe benefits, moving expenses, deferred compensation payments, and
taxable benefits paid under other plans, such as cash awards to pay taxes on
restricted stock distributions. Deferred compensation is also included in
covered compensation under the Excess Benefit portion of the SERP. The annual
covered compensation used in computing benefits under the Centura Pension Plan
and under the Excess Benefit portion of the SERP for the Named Executive
Officers ("Covered Compensation") is substantially equivalent to the annual
Salary, Bonus, Securities Underlying Options and LTIP Payouts disclosed in the
Summary Compensation Table.
Estimated benefit amounts shown in the table above are not subject to any
deduction for Social Security benefits or other offset amounts, and are based
on a straight life annuity.
As of December 31, 1997, the Named Executive Officers have completed the
following years of credited service under the Centura Pension Plan:
Robert R. Mauldin ........... 26
Cecil W. Sewell, Jr. ........ 11
William H. Wilkerson ........ 11
H. Kel Landis, III .......... 10
Frank L. Pattillo ........... 23
Steven J. Goldstein (1) ..... 1
- ---------
(1) Mr. Goldstein will not become a participant in the Centura Pension Plan
until July 1, 1998. At that time he will receive credit for his service in
1997.
Centura also provides supplemental pension benefits (the "Supplemental
Benefits") to certain executive employees, including the Named Executive
Officers, under the SERP. The Supplemental Benefits are generally payable upon
retirement, death or disability. The Compensation Committee determines the
eligible participants and designs individualized Supplemental Benefit packages
for each participant. Supplemental Benefit retirement dates and payout periods
are set on a case-by-case basis.
I-17
The Supplemental Benefit for the Named Executive Officer set forth below
is not subject to change in his compensation.
Retirement Annual Payout
Named Executive Officer Age Payment Period
- -------------------------- ------------ ----------- ---------
Robert R. Mauldin (1) .. 62 $136,504 15 years
The Supplemental Benefit for the five Named Executive Officers set forth
below is subject to changes in their compensation, but is not dependent on
years of service. The Supplemental Benefit formula for each of these
individuals provides for a monthly retirement payment equal to 70% of his final
monthly Covered Compensation, less amounts payable under the Centura Pension
Plan, the Excess Benefit portion of the SERP, and Social Security payments(2).
The Supplemental Benefit retirement age is 58(3), and payments are made for 20
years for Messrs. Sewell, Wilkerson and Pattillo. The Supplemental Benefit
retirement age is 65 and payments are made for 15 years for Messrs. Landis and
Goldstein. The annual Supplemental Benefit payable for each of these five Named
Executive Officers is set forth below for the specified compensation
classifications.
Annual Payment Annual Payment
Named Executive Officer (1997 Comp.)(4) (Maximum Comp.)(5)
- ----------------------------- ----------------- -------------------
Cecil W. Sewell, Jr ....... $227,281 $274,674
William H. Wilkerson ...... $132,478 $274,682
Frank L. Pattillo ......... $102,578 $233,388
H. Kel Landis III ......... $ 38,541 $ 91,105
Steven J. Goldstein ....... $ 73,170 $204,191
- ---------
(1) Mr. Mauldin's annual payment will remain constant for the 15 year term. His
Supplemental Benefit formula provides for monthly retirement benefits
equal to 70% of his final average monthly Covered Compensation over the
five full years prior to his retirement, less pension benefits payable
under the Centura Pension Plan and less Social Security benefits.
(2) Although the Social Security offset in the Supplemental Benefit does not
take effect until the Named Executive Officer reaches the age of 62, the
table reflects the full amount of the anticipated Social Security offset.
Prior to age 62, the Supplemental Benefit will include an additional
annual payment of approximately $13,620, $13,716, and $13,332,
respectively, for Messrs. Sewell, Wilkerson, and Pattillo. This additional
payment is not expected to vary with changes in Covered Compensation.
(3) In the event Messrs. Sewell, Wilkerson, and Pattillo do not retire at age
58, their annual Supplemental Benefits would be $31,346, $38,662, and
$40,800, respectively, paid over 15 years commencing upon retirement at
age 65.
(4) This column shows the annual Supplemental Benefit assuming the
participant's final monthly Covered Compensation is equal to his 1997
Covered Compensation as shown in the Summary Compensation Table.
(5) This column shows the annual Supplemental Benefit assuming the
participant's final monthly Covered Compensation is equal to 120% of the
Covered Compensation of the highest paid individual listed in the Summary
Compensation Table.
EXECUTIVE EMPLOYMENT AGREEMENTS
From time to time, Centura enters into employment agreements with certain
of its directors, executive officers, and key employees. The only directors or
Named Executive Officers with whom Centura currently maintains such agreements
are Robert R. Mauldin, Centura's former Chairman and Chief Executive Officer,
and J. Richard Futrell, Jr., the former Chairman of the Executive Committee.
Mr. Mauldin's employment agreement and related compensation and benefits
arrangements are summarized above under "BOARD COMMITTEE REPORT ON EXECUTIVE
COMPENSATION -- COMPENSATION OF CHIEF EXECUTIVE OFFICER." Mr. Futrell has
entered into an agreement with Centura pursuant to which he agreed to provide
consulting services to Centura for a period expiring on March 31, 1998. The
agreement provides for the payment to Mr. Futrell of annual cash compensation
in the amount of $150,000 for such consulting services. In connection with the
acquisition of CLG, Inc. by Centura, Dean E. Painter, Jr. entered into an
Executive Employment Agreement with CLG for a term of five years at a base
salary of $360,000 and providing for additional compensation and benefits to
Mr. Painter equivalent to those enjoyed by comparably situated officers of
Centura. In connection with the acquisition of Betts & Company, Thomas A.
Betts, Jr. entered into an Executive Employment Agreement with Centura
Insurance Services, Inc. for a term of five years at a base salary of $240,000,
with additional incentive compensation provided for based on the performance of
Mr. Betts and CIS, and providing for additional benefits to Mr. Betts
equivalent to those enjoyed by comparably situated officers of Centura.
I-18
OPTION REPRICING
No action was taken in 1997 to lower the exercise price of an option held
by the Named Executive Officers.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of Centura during 1997 was composed of Messrs.
Redding (Chairman), Barnhardt, Beasley, and Bowers. None of the members of the
Compensation Committee were officers or employees of Centura or its
subsidiaries during 1997 or in prior years. Mr. Betts was a member of the
Compensation Committee until the acquisition of Betts & Company by Centura, at
which time he resigned from the committee.
None of the executive officers of Centura served as a member of the board
of directors or as a member of the compensation committee (or other board
committee performing equivalent functions) of another entity during 1997, which
entity had an executive officer serving on the Board of Directors or as a
member of the Compensation Committee of Centura. Consequently, there are no
interlocking relationships between Centura and other entities that might affect
the determination of the compensation of executive officers of Centura.
COMPARATIVE COMPANY PERFORMANCE
The following line graph compares the monthly cumulative total shareholder
return of Centura Common Stock for the five-year period beginning December 31,
1992, and ending December 31, 1997, with the monthly cumulative total return of
each of the Standard & Poors Small Cap 600 Index, the Standard & Poors 500
Index, and the SNL NYSE Bank Index.
[Graph appears below with the following plot points:]
AS OF DECEMBER 31,
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Centura Banks, Inc $100.00 $102.62 $128.68 $190.98 $249.00 $393.49
Standard & Poors Small Cap 600 Index 100.00 118.78 113.12 147.01 177.60 222.56
Standard & Poors 500 Index 100.00 110.09 111.85 153.80 189.56 252.82
NYSE Bank Index 100.00 108.69 105.06 166.03 235.41 345.71
- ---------
(1) Assumes $100 invested at the close of trading on December 31, 1992 in
Centura Banks, Inc. Common Stock, Standard & Poors Small Cap 600, Standard
& Poors 500, and SNL NYSE Bank Index.
(2) Cumulative total return assumes reinvestment of dividends.
(3) Closing prices of Centura Common Stock reported on the NYSE Composite Tape
on December 31, 1993, 1994, 1995, 1996 and 1997 were $20.125, $24.375,
$35.125, $44.625 and $69.000 respectively.
I-19
PROPOSAL TWO
APPROVAL OF AMENDMENT OF OMNIBUS EQUITY COMPENSATION PLAN
On February 18, 1998, the Board of Directors of Centura approved and
adopted, subject to shareholder approval, an amendment of the Omnibus Plan to
increase the number of shares of Centura Common Stock that may be issued in
connection with awards under the Omnibus Plan and has authorized the submission
of the amendment of the Omnibus Plan to shareholders of Centura for their
approval at the Annual Meeting. The amendment increases the aggregate number of
shares of Centura Common Stock available for awards under the Omnibus Plan from
1,500,000 to 3,000,000. The Omnibus Plan provision (the "evergreen provision")
which authorizes an increase in the number of shares available for award under
the Omnibus Plan equal to four percent of any increase in the number of
outstanding shares of Centura Common Stock following the adoption of the
Omnibus Plan (other than increases due to awards under the Omnibus Plan or any
similar Plan) remains unchanged.
The Omnibus Plan is an equity-based compensation plan, designed for the
benefit of the directors, executives and key employees of Centura and its
subsidiaries, that allows the grant of a variety of different types of
equity-based compensation to eligible persons under a single plan. Participants
in the Omnibus Plan may be awarded incentive stock options, non-qualified stock
options, discounted stock options, restricted stock, stock appreciation rights,
phantom stock, stock awards, performance shares, deferred stock, and other
forms of equity-based compensation. Eligible participants under the Omnibus
Plan include any director, executive or key employee of Centura or its
subsidiaries as determined by the Compensation Committee. Centura estimates
that the number of persons eligible to participate under the Omnibus Plan is
approximately 300 persons.
The amendment of the Omnibus Plan is being submitted to the shareholders
of Centura for their approval in order to insure the availability of an
adequate number of shares of Centura Common Stock to effect awards under the
Incentive Program and Equity Compensation Program described under "BOARD
COMMISSION REPORT ON EXECUTIVE COMPENSATION" and awards relating to future
acquisitions. As of January 31, 1998, 1,725,012 shares of Centura Common Stock
have been issued pursuant to awards under the Omnibus Plan, 1,137,271 shares of
Centura Common Stock are subject to outstanding awards under the Omnibus Plan,
and 208,691 shares are available for award under the Omnibus Plan (including
shares available under the evergreen provision). If the Amendment is approved
by the shareholders of Centura, 1,708,691 shares of Centura Common Stock will
be available for award under the Omnibus Plan. Other than grants pursuant to
the Incentive Program and Equity Compensation Program, no determination has
been made on who may be granted awards with respect to the additional shares to
be authorized under the amendment, or the terms and provisions of any such
awards.
At February 27, 1998, the closing price of Centura Common Stock reported
on the NYSE Composite Tape was $70 7/8 per share.
The affirmative vote of a majority of the shares of Centura Common Stock
voted in person or by proxy at the Annual Meeting is necessary to approve the
amendment of the Omnibus Plan. If the proposal is not approved by the required
vote of shareholders, the amendment to the Omnibus Plan will not be
implemented. The Board of Directors recommends that shareholders vote FOR this
proposal.
Description of the Plan
The Centura Banks, Inc. Omnibus Equity Compensation Plan (hereafter
sometimes referred to as the "Plan") was adopted by the Board of Directors of
Centura on November 20, 1990, and received shareholder approval on April 17,
1991. The Board of Directors of Centura amended and restated the Plan effective
(i) April 21, 1993, the date shareholders approved an amendment to the Plan
increasing the aggregate number of shares of Centura Common Stock available for
awards under the Plan; and (ii) April 16, 1997, the date shareholders approved
an amendment to the Plan to add an individual participant limitation on the
amount of certain awards available under the Plan. On February 18, 1998, the
Board of Directors of Centura approved and adopted an amendment to the Plan,
effective April 15, 1998, subject to shareholder approval, further increasing
the aggregate number of shares of Centura Common Stock available for awards
under the Plan (the "Amendment"). The full text of the Amendment is set forth
in Appendix I to this Proxy Statement, to which reference is hereby made, and
the summary of the Amendment set forth below is qualified in its entirety by
such reference.
The following is a description of the material features of the Plan, as
amended effective April 15, 1998, and the federal income tax consequences to
participants under the Plan. This description is merely a summary of some of
the terms and provisions of the Plan, is not intended to be a complete
description of the Plan, and is qualified in its entirety by reference to the
full text of the Plan, a copy of which may be obtained, without charge, upon
written or oral request, by contacting
I-20
Frank L. Pattillo, Group Executive Officer, Centura Banks, Inc., 134 North
Church Street, Rocky Mount, North Carolina 27804, telephone (919) 977-8341.
NATURE AND PURPOSE. The Plan allows the grant of a number of different
types of equity-based compensation vehicles under a single plan. Awards under
the Plan may be made to participants in the form of incentive stock options,
non-qualified stock options, discounted stock options, restricted stock, stock
appreciation rights, phantom stock, stock awards, performance shares, deferred
stock, other stock-based awards, and other forms of equity-based compensation.
The Plan is designed for the benefit of the directors, executives, and key
employees of Centura and its subsidiaries, to attract and retain for Centura
and its subsidiaries personnel of exceptional ability, to motivate such
personnel through added incentives to make a maximum contribution to greater
profitability, to develop and maintain a highly competent management team, and
to be competitive with other companies with respect to executive compensation.
ADMINISTRATION. The Plan is administered by the Compensation Committee
(hereafter sometimes referred to as the "Committee") of the Board of Directors
of Centura. The Committee has the exclusive right to interpret, construe, and
administer the Plan and to select the persons eligible to receive awards under
the Plan. The Committee will determine the number of stock options, stock
rights, shares of stock, or performance shares subject to an award and the
form, terms, conditions, and duration of each award.
SECURITIES TO BE OFFERED. Centura is authorized to issue up to 1,500,000
shares of Centura Common Stock under the Plan, plus such additional number of
shares attributable to increases in the number of outstanding shares of Centura
Common Stock as described below. Under the Amendment submitted for shareholder
approval by this Proposal, the number of shares available for awards would be
increased to 3,000,000, plus such additional number of shares as are
attributable to increases in the number of outstanding shares of Centura Common
Stock as described below. The Centura Common Stock subject to an award under
the Plan will be made available from the authorized and unissued shares of
Centura Common Stock. Assuming adoption of this Proposal and implementation of
the Plan, if in the future the number of outstanding shares of Centura Common
Stock increases above the number of shares of Centura Common Stock outstanding
on November 20, 1990 (other than an increase due to awards under the Plan or
any other similar plan), then 4% of any such increase will be added to the
3,000,000 shares otherwise available for issuance under the Plan. As of
December 31, 1997, approximately 403,103 additional shares of Centura Common
Stock were available for awards under the Plan pursuant to this provision. The
amount available for awards under the Plan may also be increased by
proportionate and equitable adjustments to be made by the Committee in the
event of a reorganization, recapitalization, stock split-up, stock dividend,
merger, consolidation, sale of assets, or certain other similar events
affecting Centura and/or Centura's subsidiaries. Shares that are subject to
terminated, expired, forfeited or canceled awards will be available for awards
under the Plan. Within the aggregate limits on the amount of shares available
for awards under the Plan, an employee will be limited in the amount of stock
options and/or stock rights that may be granted to such employee under the Plan
each calendar year. To the extent required by Section 162(m) of the Code and
the regulations thereunder, an employee will be limited to stock options and/or
stock rights each calendar year representing up to 50,000 shares of Centura
Common Stock. If an employee receives awards for less than this amount (or for
no amount) during a calendar year, the difference will be carried forward and
added to the maximum award limits for future years. As of December 31, 1997,
directors and executive officers have been granted restricted stock and
non-qualified stock options in respect of 421,308 shares of Centura Common
Stock under the Plan. The closing price of Centura Common Stock on the New York
Stock Exchange Composite List on February 27, 1998, was $70 7/8.
ELIGIBLE PARTICIPANTS. Eligible participants under the Plan include any
director, executive, or key employee of Centura or Centura's subsidiaries as
determined by the Committee, as well as any other persons whose participation
the Committee determines is in the best interest of Centura. Centura presently
estimates that the number of persons eligible to participate under the Plan is
approximately 300 persons. The Committee has the exclusive right to select the
persons who are eligible to receive awards under the Plan.
TYPES OF AWARDS. The Committee is provided broad discretion under the Plan
to determine the terms and conditions of the various types of awards that may
be made under the Plan. The various forms of awards that may be made to
participants under the Plan are described below.
INCENTIVE STOCK OPTIONS. The Committee may grant tax-favored incentive
stock options ("ISOs") to eligible participants under the Plan who are
executives or key employees of Centura or Centura's subsidiaries selected by
the Committee. ISOs may be granted at such time or times determined by the
Committee until November 20, 2000, subject to certain conditions. The exercise
price of an ISO may not be less than 100% of the fair market value of the
Centura Common Stock at the time the ISO is granted. An ISO and any related
stock right granted under the Plan must be exercised in whole or in part from
time to time within 10 years from the date of grant, or such shorter period as
specified by the Committee in the award.
I-21
Upon a termination of employment of the optionee with Centura or Centura's
subsidiaries, the period of time during which an ISO or related stock right
remains exercisable will be restricted. The aggregate fair market value of the
shares of Centura Common Stock with respect to which ISOs are first exercisable
during any calendar year by an eligible participant may not exceed $100,000.
Under certain circumstances, the amount of an option granted in excess of the
foregoing limitation will be treated as a non-qualified stock option. ISOs may
not be granted under the Plan to any eligible participant who, at the time of
the option grant, owns stock possessing more than 10% of the voting power of
Centura, unless at the time of the grant the option price is at least 110% of
the fair market value of the stock subject to the ISO and the option, by its
terms, is not exercisable after the expiration of five years from the date of
the grant. Subject to the limitation on the maximum number of shares of Centura
Common Stock that may be issuable pursuant to the Plan as discussed under
"Securities to be Offered" above, the number of shares of Centura Common Stock
that may be subject to ISO awards under the Plan cannot exceed 100,000 shares.
NON-QUALIFIED STOCK OPTIONS. The Committee may also grant non-qualified
stock options ("NQSOs") to purchase shares of Centura Common Stock to eligible
participants under the Plan at such time or times determined by the Committee.
These stock options will not be eligible for the favorable tax treatment
available to ISOs. The exercise price of a NQSO will be as established by the
Committee in the agreement evidencing the award. Such exercise price may be
less than 100% of the fair market value at the time of grant. A NQSO and any
related stock right granted under the Plan will be exercisable in full or in
part from time to time as specified by the Committee or in the award agreement.
Upon termination of employment, the period of time during which the NQSO and
any related stock right may be exercisable will be restricted. A NQSO may also
be subject to such other terms and conditions, not inconsistent with the Plan,
as determined by the Committee and specified in the award agreement.
STOCK APPRECIATION RIGHTS. The Committee may also grant stock appreciation
rights ("SARs") to eligible participants under the Plan either in connection
with an ISO or a NQSO or independent of any related stock option. A SAR is a
stock right that provides for an amount payable in shares of Centura Common
Stock and/or cash, as determined by the Committee, equal to the excess of the
fair market value of a share of Centura Common Stock on the date the stock
right is exercised over the price at which a participant could exercise a
related stock option to purchase the share of Centura Common Stock. Any SAR
granted under the Plan in conjunction with a stock option will be subject to
the same terms and conditions as the related stock option, including limits on
transferability, and will be exercisable only to the extent the stock option is
exercisable. If the related stock option terminates or lapses, the SAR will
also terminate or lapse. Upon exercise of a SAR, the number of shares of
Centura Common Stock subject to exercise under any related stock option will be
reduced automatically by the number of shares of Centura Common Stock
represented by the related stock option (or portion thereof) that is
surrendered. The Committee is also empowered under the Plan, in its sole
discretion, to grant limited stock appreciation rights ("Limited SARs"), which
will become exercisable only upon a change in control and/or a potential change
in control of Centura, as defined in the Plan, and may be settled only in cash.
See "Effects of Change in Control" below.
INCIDENTS OF STOCK OPTIONS AND STOCK RIGHTS. Each stock option (ISO or
NQSO) and stock right (SAR or Limited SAR) granted under the Plan will be
subject to such terms and conditions, including employment requirements, not
inconsistent with the Plan, as may be determined by the Committee. An ISO or
related stock right under the Plan will not be transferable by the participant
other than by will or the laws of descent and distribution and will be
exercisable during the lifetime of the participant only by the participant or
his or her guardian or legal representative. A NQSO or related stock right will
be subject to the same transferability and exercisability restrictions unless
otherwise determined by the Committee, in its sole discretion.
The Committee is also authorized to amend outstanding NQSOs and related
stock rights to provide for their transferability. The purchase price for
shares of Centura Common Stock upon exercise of a stock option under the Plan
will be payable in such amounts, at such times, and upon such terms as will be
determined by the Committee, subject to any limitations set forth in the award
agreement. The Committee may establish payment terms for the exercise of stock
options that permit the participant to deliver shares of Centura Common Stock
with a fair market value equal to the stock option exercise price as payment
upon exercise of a stock option. No cash dividends will be paid on shares of
Centura Common Stock subject to unexercised stock options under the Plan. The
Committee, however, may, in its discretion, provide for the payment of
"dividend equivalents" on shares of Centura Common Stock subject to an
exercisable stock option under the Plan. The Committee may also, in its
discretion, authorize payment of "interest equivalents" on dividend equivalents
under the Plan.
RESTRICTED STOCK. The Committee may also grant restricted stock awards as
an incentive for the performance of future services that will contribute
materially to the successful operation of Centura and Centura's subsidiaries. A
restricted stock award will be an award of Centura Common Stock issued with the
restriction that the holder may not sell, transfer, pledge,
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or assign such stock and with such other restrictions as the Committee, in its
sole discretion, may impose, including a restriction on the right to vote such
shares and the right to receive cash dividends. These restrictions lapse as the
participant becomes vested. In addition to determining the applicable
restrictions on restricted stock, which may include service or performance
restrictions, the Committee may also in its discretion determine the purchase
price, if any, to be paid for such restricted stock, the length of the time
during which the restrictions will apply, and whether dividends and other
distributions on the restricted stock will be paid currently to the participant
or withheld for the account of the participant. Upon termination of a
participant's employment with Centura or a Centura subsidiary prior to the
lapse of restrictions, all shares of restricted stock then held by the
participant will be forfeited, unless otherwise provided in the award agreement
or determined by the Committee.
DEFERRED STOCK. The Committee may also award shares of deferred stock to
eligible participants. The Committee is empowered to determine the individuals
to whom, and the time or times at which, awards of deferred stock may be made,
the number of shares to be awarded, the price (if any) to be paid for the
deferred stock, the time or times within which such awards may be subject to
forfeiture, whether shares of deferred stock will accrue cash dividend
equivalents, whether any tandem awards to guarantee a minimum value will be
vested with the deferred stock and all other conditions of the deferred stock
awards. The Committee may also condition awards of deferred stock upon the
attainment of specified performance goals or such other factors or criteria as
the Committee may determine. Deferred stock awards generally may not be sold,
transferred, pledged, assigned, or otherwise encumbered during the deferral
period, as specified by the Committee. The Committee may provide for payment of
part of the deferred stock award in cash to satisfy tax withholding obligations
in certain circumstances. Upon the expiration of the deferral period,
certificates for shares of Centura Common Stock will be delivered to the
participant representing the number of shares of Centura Common Stock covered
by the deferred stock award. Upon termination of employment of a recipient of a
deferred stock award with Centura or the Centura Subsidiaries, the deferred
stock covered by an award will be forfeited by the participant, unless
otherwise provided in the Plan, the applicable award agreement, or the
Committee provides for accelerated vesting. A participant may elect to further
defer receipt of deferred stock if approved by the Committee.
STOCK AWARDS. The Committee may also award Centura Common Stock in payment
of compensation that has been earned or as compensation to be earned,
including, without limitation, compensation awarded concurrently with or prior
to the grant of the stock award. Shares of Centura Common Stock subject to a
stock award may be issued to the participant at the time the award is granted,
or at any time subsequent thereto, or in installments from time to time, as
determined by the Committee. A stock award will be subject to such terms and
conditions, including, without limitation, restrictions on the sale or other
disposition of the stock award or the shares of Centura Common Stock issued
pursuant thereto and the right to receive dividends, as determined by the
Committee.
PERFORMANCE SHARES. The Committee may also award performance shares as an
incentive for the performance of future services that will contribute
materially to the successful operation of Centura and Centura's subsidiaries. A
performance share under the Plan will be an award of a unit valued by reference
to a designated number of shares of Centura Common Stock. Payment of such unit
of value may be made to the participant in cash, Centura Common Stock, or any
combination thereof as determined by the Committee, upon achievement of such
performance objectives during the applicable performance period as the
Committee may establish at the time of the award grant or thereafter in the
case of significant events during the performance period. The Committee in its
sole discretion may determine the participants to whom awards of performance
shares will be made, the performance period, and/or the performance objectives
applicable to such awards, the form of settlement of a performance share, and
any other terms and conditions of such awards. Participants may in certain
cases defer receipt of payment.
OTHER STOCK-BASED AWARDS. The Committee may also authorize the grant of
other awards of Centura Common Stock and other awards that are valued in whole
or in part by reference to, or otherwise based on, Centura Common Stock. These
other stock-based awards include, without limitation, convertible preferred
stock, convertible debentures, exchangeable securities, phantom stock, and
stock award options valued by reference to book value or performance. The
Committee in its sole discretion is empowered to determine the participants
eligible to receive other stock-based awards, the time or times at which such
awards may be made, the number of shares of Centura Common Stock subject to
such awards, vesting periods for such awards, the payment of "dividend
equivalents" and all other terms and conditions of such awards. Shares of
Centura Common Stock subject to other stock-based awards may not be sold,
assigned, transferred, pledged, or otherwise encumbered prior to the date on
which the shares are issued or, if later, the date on which any applicable
restriction, performance, or deferral period lapses.
EFFECTS OF CHANGE IN CONTROL. The Committee is granted broad discretion
under the Plan to deal with awards under the Plan in the event of a change in
control or a potential change in control of Centura, as defined in the Plan.
Under such
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circumstances, the Committee will be authorized to take such action as it
determines to be necessary or advisable, and fair and equitable to
participants, with respect to awards under the Plan. The Committee's action may
include, without limitation, establishing, amending, or waiving the forms,
terms, conditions, and duration of an award and the award agreement, so as to
provide for earlier, later, extended, or additional times for exercise or
payments, differing methods for calculating payments, alternate forms and
amounts of payment, and accelerated release of restrictions, or other
modifications, all as more fully described in the Plan. The value of all stock
options, stock rights, restricted stock, deferred stock, performance shares,
stock awards and other stock-based awards may be cashed out, to the extent
vested, unless the Committee determines otherwise at or after grant but prior
to the change in control. The cash-out price shall be the highest price paid in
any transaction reported on the New York Stock Exchange Composite Index or paid
or offered in any bona fide transaction related to the change in control or
potential change in control, all as described in the Plan. The Plan also allows
the Committee in its sole discretion to grant Limited SARs, which become
exercisable only in the event of a change in control and/or a potential change
in control of Centura, subject to such terms and conditions as the Committee,
in its sole discretion, may specify at grant. Limited SARs will be settled
solely in cash. A Limited SAR will entitle the holder of the related stock
option to surrender such stock option, or any portion thereof, to the extent
unexercised, and to receive a cash payment equal to the difference between the
SAR fair market value (at the date of surrender) of a share of Centura Common
Stock for which the surrendered stock option or portion thereof is then
exercisable, and the price at which a participant could exercise a related
stock option to purchase the share of Centura Common Stock. For these purposes,
the "SAR fair market value" means a value established by the Committee for the
exercise of a SAR or Limited SAR.
AMENDMENT AND TERMINATION. The Plan will continue in effect until
terminated by Centura as provided in the Plan. Centura may amend or terminate
the Plan as may be necessary or desirable to implement or discontinue the Plan
or any provision thereof. No amendment to the Plan may be made without approval
by Centura's shareholders that would make certain changes, including altering
the group of persons eligible to participate in the Plan, increasing the
maximum number of shares of Centura Common Stock available for awards under the
Plan (except as otherwise provided thereunder), limiting or restricting the
powers of the Committee in administering the Plan, or extending the period
during which ISOs may be granted under the Plan. No amendment to or
discontinuation of the Plan or any provision thereof may adversely affect any
award previously granted to a participant under the Plan, without the written
consent of such participant, unless the Committee terminates, forfeits or
annuls an award if the participant competes against Centura or its subsidiaries
or is terminated for cause, which may only occur prior to a change in control
or a potential change in control. The Committee may convert an ISO to a NQSO.
Federal Income Tax Consequences
The following is a summary of the federal income tax treatment under the
Code of stock options, stock rights, and other stock awards under the Plan as
of the date of this proxy statement. The federal income tax laws pertaining to
the Plan are highly technical, and such laws are subject to change at any time.
The following summary is not intended to be exhaustive and does not discuss any
state and local taxes that may be associated with participation under the Plan.
QUALIFIED OPTIONS. In general, no taxable income will be recognized by an
optionee, and no tax deduction will be allowed to Centura, upon the grant or
exercise of an ISO. The difference between the option price and the fair market
value of the shares upon exercise, however, will be a preference item subject
to the federal alternative minimum tax. If the optionee makes a "disqualifying
disposition" of the shares of Centura Common Stock acquired through the
exercise of an ISO before the later to occur of (1) two years from the date of
the grant of the ISO, or (2) one year after the date of the transfer of the
shares to him (the "Holding Period"), the optionee must include as ordinary
income the gain realized on that disposition to the extent of the lesser of (1)
the fair market value of the Centura Common Stock on the date of exercise of
the ISO minus the option price, or (2) the amount realized on the disposition
minus the option price. Upon the occurrence of a "disqualifying disposition,"
Centura will generally be entitled to deduct, as compensation paid, the amount
so included in income by the optionee. If the optionee has held the shares for
the requisite Holding Period prior to the disposition, the optionee will be
taxed according to the rules of sales and exchanges generally, and Centura will
not be entitled to a tax deduction by reason of the disposition. An optionee
who exercises an option under the Plan may be allowed to pay for his shares
with cash or with shares of Centura Common Stock, including shares acquired in
a prior ISO exercise. Generally, such payment would not give rise to
recognition by the optionee of gain or loss. If, however, an optionee exercises
an option and pays for the shares upon exercise with shares that the optionee
acquired in a prior ISO exercise and has not held for the requisite Holding
Period, the optionee will be taxed on the disposition of the shares acquired in
the prior ISO exercise as if a "disqualifying disposition" of those shares had
occurred.
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NON-QUALIFIED OPTIONS. An optionee granted a NQSO realizes no taxable
income upon receipt of the NQSO, but is deemed to have realized ordinary
taxable income equal to the excess of the fair market value of the stock
acquired at the time of the exercise of the NQSO, over the option price paid,
unless at the time of exercise the stock remains subject to a "substantial risk
of forfeiture" as defined in Section 83 of the Code. Whether an optionee who
exercises a NQSO under the Plan will acquire the stock subject to such risk
will depend upon the terms of the NQSO award as determined by the Committee and
set forth in the agreement evidencing the award. For a discussion of the income
tax treatment when a participant acquires Centura Common Stock subject to a
"substantial risk of forfeiture," see "Restricted Stock" below. Centura is
required for federal income tax purposes to withhold tax on the amount of
income realized by the optionee in the transaction. In general, when a NQSO is
exercised by the exchange of previously acquired stock, the optionee receives a
tax-free exchange and basis carryover for old shares for an equivalent number
of new shares. The basis for any additional shares will equal the sum of the
amount included in gross income by reason of the exercise of the NQSO, plus any
amount of cash paid by the optionee upon the exercise of the NQSO. Centura will
generally be entitled to a deduction for federal income tax purposes in the
year the optionee must report the income in an amount equal to the ordinary
income realized by the optionee as a result of exercise of his NQSO. Some
variations on the federal income tax consequences described above may occur
with respect to NQSOs that may be granted with transferability provisions
authorized by the Committee and included in an award agreement.
STOCK RIGHTS. Generally, the grant of a stock right to a participant under
the Plan will not require a recognition of taxable income. Upon the exercise of
a stock right, however, payments received by the participant will be included
in that participant's income as compensation in that year. If payment is made
in cash, that amount of cash must be recognized as income. If the stock right
is paid in Centura Common Stock, income will be recognized in the amount of the
fair market value of the Centura Common Stock. Centura will generally be
entitled to a deduction for compensation in such amount in its taxable year in
which the participant's taxable year of income inclusion ends (subject to
applicable withholding requirements).
RESTRICTED STOCK. A recipient of restricted stock (or any other stock
award under the Plan that is subject to a "substantial risk of forfeiture")
generally will be subject to tax at ordinary income rates on the excess of the
fair market value of the restricted stock (or other stock award) at such time
the stock is no longer subject to forfeiture and restrictions on transfer for
purposes of Section 83 of the Code over the purchase price, if any, of such
restricted stock (or other stock award). However, a recipient who so elects
under Section 83(b) within 30 days of the date of transfer of the shares will
have ordinary taxable income on the date of transfer of the shares equal to the
excess of the fair market value of such shares (determined without regard to
the restrictions) over the purchase price, if any, of such restricted stock (or
other stock award). Centura will generally be entitled to a deduction for
federal income tax purposes in the year the participant must report the income
in an amount equal to the ordinary income realized by the participant as a
result of the restricted stock or other stock award (subject to applicable
withholding requirements).
DEFERRED STOCK. The recipient of a deferred stock award under the Plan
will generally be subject to tax at ordinary income rates on the fair market
value of the deferred unrestricted stock on the date that such stock is
transferred to the participant under the award. Generally, a participant will
be subject to tax when the payment is received or deemed to be constructively
received. Centura will generally be entitled to a deduction for federal income
tax purposes in the year the participant must report the income in an amount
equal to the ordinary income realized by the participant as a result of the
deferred stock award (subject to applicable withholding requirements).
STOCK AWARDS. Unrestricted awards of Centura Common Stock will be taxable
to the participant and deductible by Centura at the time of the award in an
amount equal to the fair market value of the shares at that time. If the shares
are subject to forfeitability and nontransferability restrictions, the federal
income tax consequences will be as described under "Restricted Stock" above.
Centura will be entitled to a deduction for federal income tax purposes in the
year the participant must report the income in an amount equal to the ordinary
income realized by the participant as a result of the stock award (subject to
applicable withholding requirements).
PERFORMANCE SHARES. A participant granted an award of performance shares
will not recognize income at the time of grant but generally will recognize
ordinary income when the award is settled (either at the conclusion of the
performance period or at the end of the deferral period elected by a
participant). Generally, a participant will be subject to tax when the payment
is received or deemed to be constructively received. The amount of ordinary
income recognized will be equal to the sum of the cash received, if any, plus
the then fair market value of the shares of Centura Common Stock received.
Centura will generally be entitled to a deduction for federal income tax
purposes in the year the participant must report the income in an amount equal
to the ordinary income realized by the participant as a result of the
performance share award (subject to applicable withholding requirements).
I-25
OTHER ISSUES AFFECTING TAXATION. The Plan authorizes the acceleration of
payment of awards and related shares of Centura Common Stock in the event of a
change in control or potential change in control of Centura, as defined in the
Plan. Such acceleration of payment may cause part or all of the consideration
involved to be treated as a "parachute payment" under the Code, which may
subject the recipient thereof to a 20% excise tax and which may not be
deductible by Centura. In general, Section 162(m) of the Code limits the
Company's federal income tax deductions for each of the chief executive officer
and the four highest compensated officers to $1 million in any year, with
certain exceptions. Among those exceptions are certain performance-based
compensation, including stock options and stock appreciation rights. The Plan
was designed so that this exception could be used to apply to stock options,
stock appreciation rights and performance awards granted under the Plan as to
which the Committee has no right to change performance goals after the date of
grant.
New Plan Benefits
As of the date hereof, no additional stock options, restricted stock
awards, stock appreciation rights, phantom stock, performance shares, deferred
stock, other stock based awards or other form of equity compensation have been
granted or allocated under the Plan, as amended by the Amendment, to any
eligible participants. The benefits or amounts that will be received by or
allocated to the Named Executive Officers, the non-executive director group,
the executive group and the non-executive employee group under the Plan, as
amended by the Amendment, if any, are not determinable at this time. For a
summary of stock option grants, restricted stock awards and the dollar value of
such grants or awards made under the Plan in fiscal year 1997, see "Executive
Compensation -- Summary Compensation Table," "Option Grants in Respect of Last
Fiscal Year" and "Board Compensation Committee Report on Executive
Compensation."
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
From time to time, Centura Bank extends credit to executive officers and
directors of Centura, members of their immediate families, and companies with
which they are associated, in the ordinary course of their business. During
1997 and through January 31, 1998, the highest aggregate amount of such
extensions of credit was approximately $24.5 million (approximately 5% of
Centura's equity capital). At December 31, 1997, executive officers and
directors, and their immediate families or related entities, as a group, were
indebted to Centura Bank in the approximate aggregate amount of $22.3 million
(approximately 4% of Centura's equity capital). All extensions of credit to
executive officers and directors were made in the ordinary course of business
and on the same terms, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with unaffiliated
parties. These loans do not involve more than the normal risk of collectibility
or present other unfavorable features. Centura Bank has had, and expects to
have in the future, similar banking transactions with directors, executive
officers, principal stockholders, and their associates.
In November 1997, Centura acquired Betts & Company, an insurance agency,
of which Thomas A. Betts, Jr., a Centura director, was a partner. The
transaction was on an arms-length basis and Mr. Betts took no part in the
deliberations of the Board of Directors regarding the transaction.
In November 1996, Centura acquired CLG, Inc., a technology leasing company
headquartered in Raleigh, North Carolina ("CLG"). Following its acquisition by
Centura, CLG entered into a lease with Painter Properties, which is 100% owned
by Mr. Painter, for CLG's main administrative office building in Raleigh, North
Carolina, providing for total aggregate rental payments over the term of the
lease of approximately $632,200.
Centura Bank has entered into a lease with Cameron-Edenton Company for a
drive-in bank facility in Edenton, North Carolina, which provides for total
aggregate rental payments over the term of the lease of approximately $314,400.
Charles M. (Terry) Reeves, III, a director of Centura, is a 50% partner in
Cameron-Edenton Company.
Centura Bank has entered into a lease with Wren Land Company for a
drive-up banking facility and administrative offices in Wilson, North Carolina,
which provides for total aggregate rental payments over the term of the lease
of approximately $526,000. George T. Stronach III, a director of Centura, owns
one-third of Wren Land Company.
Charles T. Lane, a director of Centura, is a partner in the law firm of
Poyner & Spruill, L.L.P., which firm performed legal services for Centura and
Centura Bank during 1997. During 1997, fees paid to Poyner & Spruill, L.L.P. by
Centura for legal services were, in the aggregate, $1,707,222, which exceeded
five percent of Poyner & Spruill, L.L.P.'s gross revenues.
O. Tracy Parks, III, a director of Centura, is a partner in the law firm
Parks, Pate & Scarborough, L. L. P., which firm performed legal services for
Centura Bank during 1997. During 1997, fees paid to Parks, Pate & Scarborough,
L.L.P. by Centura Bank for legal services did not exceed five percent of the
firm's gross revenues.
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SELECTION OF AUDITORS
KPMG Peat Marwick LLP, Certified Public Accountants ("Peat Marwick"),
served as independent public accountants for the purpose of auditing Centura's
consolidated financial statements for the year 1997. A representative of Peat
Marwick is expected to be present at the Annual Meeting to answer questions
concerning the financial statements presented and will be permitted to make a
statement at the meeting.
SHAREHOLDER PROPOSALS
It is anticipated that Centura will hold its 1999 annual meeting of
shareholders in April 1999. Shareholders wishing to submit proposals for
inclusion in the Centura proxy statement for the 1999 annual meeting must
submit such proposals to the Secretary of Centura by November 11, 1998, in
order to be considered for inclusion in the proxy materials for such meeting.
The Board of Directors of Centura will review any shareholder proposal that is
received by this date and will determine whether any such proposal should be
included in the proxy solicitation materials for the 1999 annual meeting.
Proposals so presented may be excluded from the proxy solicitation materials if
they fail to meet certain criteria established under the Exchange Act.
Shareholders are urged to submit any such proposal to Centura by certified
mail, return receipt requested.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors of Centura
knows of no matters that will be presented for consideration at the Annual
Meeting other than as described in this proxy statement. However, if any other
matters should properly come before the Annual Meeting or any adjournment or
postponement thereof and be voted upon, the enclosed proxy will be deemed to
confer discretionary authority upon the individuals named as proxies therein to
vote the shares represented by such proxy as to any such matters.
/s/ Cecil W. Sewell, Jr.
Cecil W. Sewell, Jr.
Chairman of the Board and
Chief Executive Officer
By order of the Board of Directors
March 11, 1998
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APPENDIX I
DESCRIPTION OF PROPOSED AMENDMENT TO OMNIBUS PLAN
Corporate Authorization of the Amendment
At its meeting on February 18, 1998, the Centura Banks, Inc. Board of
Directors, on the recommendation of its Compensation Committee, adopted the
following resolutions:
WHEREAS, Centura Banks, Inc. ("Centura") has previously established and
adopted the Centura Banks, Inc. Omnibus Equity Compensation Plan (the
"Plan"), which was last amended and restated effective April 16, 1997; and
WHEREAS, Centura, as Employer under the Plan, reserves the right to amend
or modify the Plan at any time; and
WHEREAS, management and the Compensation Committee of this Board of
Directors have recommended that the number of shares available for awards
under the Plan (exclusive of shares authorized under the "evergreen"
provision thereof) be increased from 1,500,000 to 3,000,000, and this Board
of Directors has determined, after a thorough evaluation of this matter,
that such increase is in the best interest of Centura;
NOW, THEREFORE, BE IT RESOLVED, that, subject to the approval of the
shareholders of Centura, amendment of the Centura Banks, Inc. Omnibus
Equity Compensation Plan to increase the aggregate number of shares
available for awards under the Plan (exclusive of shares authorized under
the "evergreen" provision of Section 3.6 thereof) from 1,500,000 shares to
3,000,000 shares be, and it hereby is, authorized, approved and adopted;
FURTHER RESOLVED, that the 3,000,000 shares (and any increases in such
number by operation of the Plan's "evergreen" provisions) available for
awards under the Plan, as amended, be, and they hereby are, authorized and
reserved for issuance in accordance with the terms of the Plan; and
FURTHER RESOLVED, that the Chairman and Chief Executive Officer, any Group
Executive Officer, the Chief Financial Officer, and the General Counsel be,
and each of them hereby is, authorized and directed to execute and deliver
any documents and instruments and to do any and all such additional acts
and things as may be necessary and appropriate, in the executing officer's
sole discretion, to give full effect to the foregoing resolutions.
Text of the Amendment
In order to implement the proposed Amendment:
Section 1.3 shall be amended in its entirety to read as follows:
The Plan shall be effective November 20, 1990 (the "Effective Date"), as
amended and restated effective April 21, 1993, as further amended and
restated effective April 16, 1997, and as further amended effective April
15, 1998, subject to the approval of Section 3.6 of the Plan by a
majority of the votes cast on the issue by the holders of the
Corporation's Common Stock at the first meeting of stockholders at which
directors are to be elected that occurs after December 31, 1997.
Section 2.33 shall be amended in its entirety to read as follows:
"Plan" means the Centura Banks, Inc. Omnibus Equity Compensation Plan, as
amended April 15, 1998, and as further amended from time to time.
Section 3.6 shall be amended in its entirety to read as follows:
The aggregate number of shares of Stock which are subject to an Award
under the Plan shall be three million (3,000,000) shares, plus four
percent (4%) of any increase, other than any increase due to Awards
under this Plan or any other similar plan of the Corporation, in the
number of authorized and issued shares of Stock above the number of
authorized and outstanding shares as of the Effective Date. Such
shares of Stock shall be made available from authorized and unissued
shares of the Corporation.
(a) If, for any reason, any shares of Stock or Performance Shares
awarded or subject to purchase under the Plan are not delivered or
purchased, or are reacquired by the Corporation, for reasons
including, but not limited to, a forfeiture of Restricted Stock or
termination, expiration or cancellation of a Stock Option, Stock
Right or Performance Share, or any other termination of an Award
without payment being made in the form of Stock
I-28
(whether or not Restricted Stock), such shares of Stock or
Performance Shares shall not be charged against the aggregate
number of shares of Stock available for Award under the Plan.
(b) For all purposes under the Plan, each Performance Share awarded
shall be counted as one share of Stock subject to an Award.
(c) To the extent a Stock Right granted in connection with a Stock
Option is exercised without payment being made in the form of
Stock (whether or not Restricted Stock), the shares of Stock which
otherwise would have been issued upon the exercise of such related
Stock Option shall not be charged against the aggregate number of
shares of Stock subject to an Award under the Plan, and shall be
available for Award under the Plan.
Miscellaneous Authorization
In addition to the foregoing, the authorizing resolutions relating to the
Amendment authorize the officers of Centura named therein to take such further
steps as are necessary to give effect to the Amendment. In like manner, the
approval of Centura's shareholders of the Proposal under which the Amendment is
proposed to be approved will authorize such officers to take such further
necessary actions.
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